California homeowners are paying more for less as insurers hike premiums, cancel coverage, and fight wildfire survivors over legitimate claims, all while the industry posts record profits. A Stanford University study found average home insurance premiums in California surged 84% over the past five years, and Insurify found California saw one of the largest premium increases in the nation in the first half of 2026, jumping 5% and adding $123 to the average homeowner’s bill. Beginning on October 15, families covered by the California FAIR Plan, the state’s insurer of last resort, will see an average 29.1% rate hike take effect at renewal.
As private insurers retreat, more than 250,000 California policies were not renewed from 2020 to 2023, and private carriers wrote fewer than 750,000 new residential policies in 2023, the lowest number since at least 2015. Homeowners left behind are being pushed onto the FAIR Plan, which now covers more than 684,000 policies, a 152% jump since 2023. Others are landing in surplus lines policies with little state oversight, a market that has grown tenfold in California since 2021.
Insurance companies are passing the costs and risks of climate change onto policyholders while continuing to underwrite and invest in the same polluters responsible for the crisis. More than 4.6 million California properties face at least a moderate wildfire risk. After the January 2025 Eaton and Palisades fires, State Farm, the state’s largest home insurer, handled roughly a third of all residential claims. State regulators then found 398 violations of state law in a sample of just 220 of those claims.
Meanwhile, the Trump administration and congressional Republicans are shifting even more climate risk onto California families. Of the $1.1 billion in FEMA Hazard Mitigation Grant funds distributed nationwide this year, California has received just $830,000, even as fire survivors are still rebuilding and the next wildfire season bears down.
Californians Are Paying More, Getting Less While Home Insurers Profit
Fact: California home insurance premiums rose 84% over five years, driven by the steepest increases in high wildfire risk communities, while out-of-pocket deductibles rose by more than 40% over the same period.
Fact: Insurify projected California would see the largest home insurance rate increase of any state in 2026, nearly 16% by year’s end.
Fact: The FAIR Plan’s 29.1% average rate hike takes effect October 15. Because the FAIR Plan only covers fire, policyholders must buy a second policy for other hazards, bringing combined costs to more than double the average cost of a private policy.
Fact: Only about 60% of non-renewed homeowners make it onto the FAIR Plan, leaving tens of thousands of California families underinsured or with no coverage at all.
Fact: California surplus lines premiums grew from $135 million in 2021 to nearly $1.3 billion and now make up 7% of all homeowners premiums in the state. Nationally, surplus carriers paid just 36 cents in claims for every premium dollar over five years, compared with 58 cents for regulated insurers. Their policies also carry no state guarantee fund protection if the company goes under.
Fact: State regulators are considering suspending State Farm’s license for up to a year after finding violations in roughly half of sampled wildfire claims. The violations included delayed investigations, lowball settlement offers, and illegal denials of smoke contamination testing. In August, Los Angeles County sued State Farm for mishandling fire survivors’ claims.
Fact: The California Department of Insurance reviewed more than 2,000 complaints from Los Angeles fire survivors. That review has already forced more than $338 million in additional payments to policyholders, including more than $50 million for smoke damage.
Fact: In Ferrier v. State Farm, sixty homeowners allege that State Farm and 15 other insurers conspired to cancel their fire policies before the 2025 wildfires. The cancellations forced them onto the FAIR Plan with less coverage and higher rebuilding costs.
Fact: Property and casualty insurers made an unprecedented $405 billion in profit nationally over the last three years, plus $89 billion in investment income in 2025, even as they raised prices for California families.
Fact: Rising premiums are hitting renters too, with California landlords passing higher insurance costs on to their tenants.
Republicans Are Making California’s Crisis Worse
Reps. David Valadao (CA-22) and Darrell Issa (CA-48) voted for Trump’s “One Big Beautiful Bill Act,” which cut $200 million from NOAA’s weather forecasting and public alert programs. Those are the tools Californians depend on for red flag warnings and flash flood alerts. Valadao’s district includes Tulare County, which ranks in the 98th percentile nationally for both flood and wildfire risk. Issa has taken at least $6,000 from the American Property Casualty Insurance Association’s PAC, the property insurance industry’s largest trade group.
The Trump administration has also starved California’s disaster preparedness. California received $830,000 in FEMA Hazard Mitigation Grant funds this year, while Florida received $239 million and Texas $131 million, as part of $1.68 billion withheld from California and Colorado. The administration also denied California’s appeal for aid following the 2024 wildfires. Even President Trump wrote on Truth Social that State Farm and other insurers had been “absolutely horrible” to Los Angeles fire survivors. Republicans in Congress still haven’t followed through.
Solutions Exist to Lower Costs and Protect California Homeowners
Reps. Valadao, Issa, and the Republican-controlled Congress need to stop making this crisis worse for their constituents. They should:
- Put their constituents first and rein in egregious home insurance profits;
- Release the FEMA hazard mitigation funds withheld from California and restore full funding to NOAA’s forecasting and alert programs;
- Reinstate programs, like BRIC, that help communities harden homes and prepare before wildfires hit;
- Require surplus lines carriers to contribute to guaranty funds and publicly disclose premiums, denials, and claims outcomes, as recommended by Climate Cabinet Education;
- Require insurers to disclose profit margins and investments alongside rate hike requests;
- Hold polluters accountable for climate-driven risks and damage; and
- Hold hearings on insurers’ pattern of delay, deny, and defend practices harming policyholders.
California took an important step last month when Governor Newsom signed the Smoke Damage Recovery Act. The law requires insurers to pay for smoke testing and keep living expense coverage in place until homes are safe to occupy. He also signed the Disaster Recovery Reform Act. State leaders should build on that progress by:
- following through on enforcement against State Farm;
- rejecting excessive rate increases under Proposition 103; and
- advancing polluters pay legislation so fossil fuel companies help cover the climate costs driving premiums higher.
In October 2025, Unlocking America’s Future released a comprehensive report on California’s home insurance crisis. UAF also held a press call with former State Insurance Commissioner Rep. John Garamendi (CA-8). California’s congressional Republicans have still failed to act. As Californians prepare to elect a new insurance commissioner in November, numerous solutions exist to lower risks and costs for California families if politicians and regulators choose to act.
For questions or to connect with an insurance expert, ratings analyst, policymaker, or impacted homeowner, please email jayson@focalpointstrategygroup.com.
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