Quick Look: The Best California Homeowners Insurance
- Best Existing Policyholders: State Farm
- Best for Extended Replacement Costs: Mercury
- Best for Claims-Free Policyholders: Travelers
- Best for Customizable Policies: Nationwide
- Best for Multiple Losses Under One Deductible: Safeco
If you’re a California resident, you’re relatively lucky, despite the fact that your home may be built on a floodplain, on a wildfire-loving, brushy mountainside, on an seismic fault or right in the path of giant mudslides. Despite all that, California homeowners insurance is sometimes less than the national average (especially when you consider home values) because of all of the insurance companies in California vying for your business. A homeowners policy offers financial protection for the family, but you need to know what it covers and how it works.
The Best California Homeowners Insurance
1. State Farm
State Farm has been writing policies since 1922 and now insures more cars and homes than any other U.S. insurer. With an A.M. Best rating of A++ for financial strength, State Farm makes a stable choice in a state with such a variety of risks for homeowners. Rates are driven by both individual criteria and by broader trends, including recent spikes in claims.
A recent ruling by California’s Insurance Commissioner ordered State Farm to reduce homeowners, renters, and condo insurance rates by about 7 percent, possibly making the insurer’s rates more attractive than those of some other California insurance companies. As always, customers are encouraged to shop around and compare policy features in addition to rates.
As an added bonus, State Farm has 1 of the largest agent networks of the major insurers, making a local office easy to find for customers who have questions, need service, or are ready to buy a policy.
2. Mercury
Founded in 1962, Mercury Insurance was started in California, making this insurer uniquely familiar with the state, its vast geography, and the needs of its residents. In an industry where many policies look the same, Mercury finds a few ways to stand out from the pack.
One notable benefit of their homeowners insurance policy is the company’s Extended Replacement Cost option, which provides additional coverage up to 150% of the dwelling coverage limits.
Dwelling coverage is the portion of the policy that covers the house itself and cost overruns due to delays or compliance with new building codes aren’t uncommon. Extended Replacement Cost from Mercury promises to provide consumers with some more room in the budget if dwelling rebuild costs start to swell.
3. Travelers
Both directly and through its network of nearly 14,000 independent agents (around the world), Travelers has been providing insurance for over 160 years, earning the reputation of being one of the best property and casualty insurers in the market.
Travelers prides itself on its breadth of policy options which provide consumers with the ability to customize their policy to meet their needs.
4. Nationwide
Nationwide provides two important homeowners insurance policy options that not every insurer offers, or even talks about. Nationwide’s Brand New Belongings option provides replacement cost coverage for your personal property.
Some home insurance policies only provide actual cash value, which means you are paid for the depreciated value of your belongings in a covered claim. The depreciated value often isn’t enough to replace all you need to replace. Another policy option offered by Nationwide is Better Roof Replacement which guarantees that your roof will be rebuilt with stronger and safer materials if it needs to be replaced due to a covered loss.
Nationwide offers a discount of up to 20% for customers who bundle home and auto insurance and the company offers a discount for policyholders 60 years or older.
5. Safeco
This insurer provides a pretty neat benefit for customers who bundle home and auto policies called Multiple Losses One Deductible. The way it works is if a claim damages both your home and your car, you would only pay one deductible.
For example, if a tree falls on the garage and damages both the garage and the car parked inside the garage, you wouldn’t pay both a comprehensive auto insurance deductible and a home insurance deductible. The auto deductible would be waived. A multi-policy discount would apply as well for customers who bundle both auto and home insurance.
Safeco also provides an option to insure your belongings for their full replacement cost, ensuring you’ll have enough money to replace your things that are damaged or destroyed in a covered claim.
Average Annual Home Insurance Premium in California
California’s beauty and opportunity come at a cost with some of the highest housing prices in the nation. The average home cost in California is $440,000 vs. a national average of $180,000.
Homeowners insurance premiums, on average, are lower than might be expected, however, with an average $974 for the Golden State. While California’s average premium close to the national average of $1,132, the difference in price in some areas is related to risk and (partly) to home prices.
Remember, though, your standard homeowners insurance policy should handle property damage, additional living expenses, water damage (damage from plumbing), personal liability, detached structures, and certain types of storm damage and permanent repairs. Your homeowners policy can also cover valuable items with a rider or other personal assets.
Homeowners insurance policies feature dwelling coverage, which pays toward covered claims that damage the home. Dwelling coverage is based on the cost to rebuild the home. The same home will cost different amounts to build in different parts of the country, based on building supply costs, transport costs, and labor costs. However, that doesn’t explain all of the increased cost of homeowners insurance in California.
While dwelling coverage is based on the calculated cost to rebuild the home, mortgage lenders may require higher dwelling coverage amounts. A home that costs $250,000 to rebuild may sell for $450,000, based on its location in sunny California. Assuming a 20% down payment, that leaves a $360,000 balance on the mortgage. Many lenders will require dwelling coverage to be equal or higher than the mortgage balance.
Your insurance policy is insuring your home and that home is securing the loan. The increase in dwelling coverage that will be required by some lenders drives average homeowners insurance premiums higher.
Keep in mind, too, that flood insurance is a separate policy. Yes, you get liability protections, coverage for medical payments and the like, but damage caused by flooding is not covered under a home insurance policy. Most storm damage or flood damage will be denied under a home insurance plan, but your flood insurance policy will pick up the slack. Vacation homes often need this sort of insurance, but it’s helpful to purchase flood coverage just in case.
How to Find the Best California Homeowners Insurance Premium
With home insurance premiums in California a bit higher than the national average, California homeowners have an interest in saving money on their insurance, without sacrificing quality coverage.
There are a number of ways to save money on homeowners insurance costs:
Bundling. Many insurers offer a discount on your home and/or auto insurance if you purchase both policies from the same insurer. Ask about bundling discounts and if you do bundle, check your bill for the discount.
Bundling discounts happen automatically with some insurers while others require that an agent submit the change. You don’t want your discount to fall through the cracks.
Deductibles. The deductible for an insurance policy is the portion you would pay toward a covered claim. Many homeowners insurance companies have moved toward a percentage-based deductible, meaning the insured pays a fixed percentage of the dwelling coverage amount toward their covered claim.
Choosing a higher deductible will lower your premium, but be aware that percentage-based deductibles can be quite high if the dwelling coverage for your home is high. It’s all savings until there is a claim, and then the deductible you chose is real money that will have to be paid toward your claim. Many policies will have separate deductibles for wind/hail vs. other perils.
Alarms and smoke detectors. Most insurers offer a discount for security systems. Homes with a fire alarm as well will earn an additional discount. Smoke detectors are not only required by code but also will save you a few dollars on your home insurance premiums.
Newer homes. The added safety modern building codes bring to a home can save you money on homeowners insurance with some insurers.
Most Affordable Cities for California Homeowners Insurance
Rates for home insurance are individualized, but some areas have lower average premiums than others. Differences in risk are usually at the heart of differences in rates.
A given area may have less crime, more brick construction, smaller homers or newer homes, or less exposure to weather-related risks. Some of the most affordable cities in California for home insurance include:
- Santa Maria
- San Luis Obispo
- Lompac
- Santa Barbara
- Paso Robles
Most Expensive Cities for California Homeowners Insurance
Among some of the more expensive cities in California for home insurance are:
- Los Angeles
- Compton
- Palmdale
- Berkeley
- Calexico\
Find Quality California Homeowners Insurance Today
We all like to save a few dollars on our home insurance premiums.
However, choosing a policy that provides the coverage you need can save massive amounts of money if there is a claim, turning the few extra dollars you might spend into a well-planned investment in protection for you, your home, and your family.
Want to learn more about finding affordable insurance? Check out Benzinga’s guides to the best cheap car insurance in San Francisco, San Jose, Los Angeles or San Diego, the best affordable health insurance and the best umbrella insurance policies.
Frequently Asked Questions
Can homeowners insurance cover valuables?
Homeowners insurance might cover valuables under a rider, but you might also want another insurance policy to deal with these items.
Does homeowners insurance cover flooding and earthquakes?
No. Homeowners insurance does not cover floods or earthquakes. You need a unique policy for these disasters.