Over 1.1 Million California Homeowners Face Property Insurance Rate Hike

Insurance premiums for 1.1 million CSAA and Mercury customers in California are about to get more expensive. The rate increases come from a December regulatory approval that allows the two insurers to raise California policyholders’ rates by an average of 6.9%. This approval marks the latest in a string of hefty rate hikes for insurers across the state.

The approvals are the first under California Insurance Commissioner Ricardo Lara’s sustainable insurance strategy. In exchange for the rate increases, both insurers have committed to expanding coverage in underserved areas and areas with a higher risk of wildfire events.

For policyholders, it means a heftier bill now in lieu of future losses in riskier areas.

Increases will affect more than 1 million California policyholders

Mercury is the state’s third-largest insurer. When its rate increase begins in July, it will impact 650,000 policyholders. Home insurance rates will go up an estimated 8.2%. Condo owners will see an average rate increase of 8.3%, and renters an average rate increase of 6.3%.

Some Mercury policyholders’ rates could drop by as much as 10%, while others could go up by as much as 60% in certain areas, according to the San Francisco Chronicle.

CSAA’s rate increases will be less dramatic, with increases as high as 8%–10%. But these increases will occur sooner, starting March 15, for the company’s 480,000 California policyholders.

What’s next? Additional coverage for underserved areas

In exchange for the rate increases, both insurers have pledged to write additional policies in underserved or high-risk areas. But while rate increases will impact more than 1 million policyholders, the number of new, high-risk policies being taken on is far lower.

Mercury has agreed to add at least 2,000 more policies in underserved areas by July 2028.

The company has already added 200 new policies in Paradise, an area destroyed by the 2018 Camp Fire.

CSAA has pledged to take on additional policyholders as well, offering quotes to AAA users on California’s FAIR Plan to lessen the number of policies carried by the state’s insurer of last resort.

More than 646,000 California homeowners have a FAIR Plan policy, and the plan added 21,000 policies between September and December of last year.

Enrollment in the FAIR Plan has increased 140% since 2022.

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