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California’s 17% Cheaper Home Insurance Isn’t As Affordable As It Looks

TAMPA, Fla., November 14, 2022 /PRNewswire/ – A recent guide published by revealed this California homeowners pay surprisingly low home insurance rates compared to the rest of the country.

The average monthly premiums in California is $84 in comparison with $101 nationwide. published additional statistics:

  • State population – 39,512,223
  • Median House Price – $492,080
  • Home Ownership Percentage – 54.80%
  • Largest Home Insurance Company – State Farm
  • Average annual rate $1,008
  • Direct Premiums Written Annually – $8,365,295
  • Home Owners Insurance Sustained Losses – $56,835,067

Consider California’s high cost of housing, this fact may seem shocking. However, other factors are involved. And in the end, California homeowners often pay more than average.

Although it may seem counterintuitive, some analysis can make that fact easier to understand.

First, insurance rates are based on risk. While a more expensive home poses more risk to an insurer, the value of the buildings is in California are comparable to national property values. In California, property values ​​drive home prices. It is not uncommon for lots in popular neighborhoods to sell for over a million dollars.

Home insurance providers do not cover the value of the land. Instead, they cover the value of the home. The insurer’s risk therefore does not fully reflect the purchase price.

Second, California homes face risks not covered by standard home insurance. While California homeowners pay less for traditional insurance, they often have to add other types of insurance.

Earthquakes are a real risk for California residents, but earthquake damage is not covered by standard home insurance. Very California Homeowners must purchase a separate earthquake insurance policy to cover the cost of damage due to an earthquake.

Another additional policy many California residents must buy is flood insurance. Standard home insurance does not pay for flood damage that comes from a weather event. So, while they may cover damage from broken pipes, they won’t cover damage from a rising river.

Melanie Mussona nationally recognized home insurance expert with ExpertInsuranceReviews.comexplains, “The benefit of slightly lower home insurance rates for California help residents offset the extra cost of earthquake insurance and any additional coverage needed.”

In CaliforniaHome insurance providers must offer earthquake insurance to their policyholders annually.

Read the entire report here: California Home Insurance Guide 2022 (Companies + Rates)



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