Home Insurance in California

If you own your own home, a comprehensive insurance policy is a must-have, but finding the right policy can be difficult. Getting covered doesn’t have to be a hassle! With Obrella, you can take the stress out of choosing a home insurance policy. Obrella connects you with our friendly and knowledgeable insurance experts, whose expertise in California home insurance coverage makes it easy to find the best policy for you. They’ll help you review options from multiple providers and customize your coverage depending on your needs. They can even bind your policy—all in one simple call.

How Much Do Homeowners in California Pay for Insurance?

The average home insurance premium in California is $980 a month, while the national average is $1,034 a month. California has the 22nd highest average insurance premiums in the country.

Median Home Value: 374,700

Household Income: 60,487

% of Income on Home Ownership: 41.60%

The cost of homeownership in general is high in California. It equals out to approximately 41.60% of the average resident’s income. Homes are expensive. So any significant damage to a home could cost a lot to fix.

This is why California residents understand the immense value of home insurance. The median home value in California is $366,400, with an average household size of just under three people. With a median household income of$60,190, Californian’s spend about 41.6% of their household income on home ownership. Because of this, California is ranked 2nd in the country for states whose residents spend the most on home ownership. Let an insurance expert help you find the right homeowners insurance policy for you.

How Do Insurance Companies Determine Annual Premium in California?

With any new policy, insurance companies assess how risky it will be to insure your home. This has a direct effect on how much you pay for your policy. The higher the risk, the more you’ll pay.

Providers look at your property’s characteristics, value, location, and the surrounding area when determining risk and setting your home insurance premium. Your provider will evaluate your home’s size, date of construction, and add-ons like swimming pools and guest homes. Regional factors can include local crime rates, home prices, and the likelihood of severe weather events or natural disasters in your area. If you live on a flood plain, for instance, you should expect to pay higher insurance premiums than the owner of a similar home on higher ground. This is partly because you’ll also need flood insurance and partly because of other additional risks. Likewise, living in an area with high rates of vandalism and home burglary may also raise your costs. (For more information, read our “Protecting Your Financial Security: Latest Burglary Statistics“).

Fortunately, your homeowners insurance premium can be lowered with a few proactive steps on your part. Installing devices to protect your home like motion-sensitive lights, surveillance cameras, or a security system can lower the risk of your home being attacked, which would in turn lower your rates. In some cases, you can also make your premium more affordable by improving your credit score. The cost of homeownership insurance is flexible, and getting quotes from multiple companies is one of the most important things you can do.

How Does Homeowners Insurance Work in California?

The majority of California home insurance companies have multiple coverage options to pick between. Generally, insurance companies start with the type of home you own. You don’t need to insure the structure if you live in a condo, but you do if you own a single family home. For homeowners with a standalone building, there are a few options:

• HO2: This is a named perils policy. In short, your home is only covered if the specific peril is named in the policy.
• HO3: This is an open perils policy. It’s often more expensive, but it covers perils unless they are specifically excluded. Depending on the state, insurers may exclude a lot of common or uncommon risks. So always make sure to read over the policy documents so you know what you’re getting. Neither of these policy types will cover damage in the event of neglect.
• Dwelling Policies: Homeowners policies are meant to cover your home. Dwelling policies are often called “second home insurance” or “investment property insurance.” Essentially, it only covers the structure and liability. It does not cover furniture or other personal belongings.

More details below:

• HO-1: Limited Coverage
  • No longer available in most states, this basic policy offers coverage against the first 10 classified disasters. These include fire or lighting, windstorms or hail, explosions, riots, damage caused by aircraft, damage caused by vehicles, smoke, vandalism, theft, and volcanic eruption.
• HO-2: Basic Policy
  • HO-2 policies are designed to insure your home if it’s damaged by any of the 16 classified disasters.
• HO-3: Standard, most popular
  • The majority of people in California purchase this type of policy because of its extensive coverage and relatively few exceptions.
• HO-8: Older Home
  • To protect against depreciation, this policy will usually reimburse homeowners for damage on an actual cash value basis, though some older homes may not qualify for full replacement cost policies.

Read more: Choosing The Right Homeowners Insurance In California For 2023

What Is Covered By Standard California Homeowners Insurance?

Usually, home insurance only covers loss of or damage to your property in situations that are explicitly detailed in your policy. So, for instance, you wouldn’t receive a payment for flood damage if your policy doesn’t provide flood coverage. Check out the following home insurance coverage definitions for more information on your policy options:

• Coverage A – Dwelling
  • Protects against damage to the home and attached structures. This includes damage to the home’s plumbing, wiring, and permanent air-conditioning and heating systems.
• Coverage B – Other Structures
  • Tool sheds, free-standing garages, fences, guest homes, and other non-attached structures are covered under Other Structures.
• Coverage C – Personal Property
  • Personal Property coverage reimburses homeowners for the value of possessions, like electronics, furniture, and clothing items that are lost or damaged, even if the damage did not occur on the homeowner’s property such as items in a storage unit.
• Coverage D – Loss of Use
  • If home repairs prevent you from inhabiting your house, Loss of Use coverage can help. This coverage reimburses the homeowner for their living expenses for as long as they are unable to live in their home.
• Coverage E – Personal Liability
  • Personal Liability coverage provides financial protection in the event of a lawsuit in which the homeowner is found legally liable for another’s injuries or damages. It also covers medical bills for individuals hurt on a homeowner’s property or by the homeowner’s pet.
• Coverage F – Medical Payments to Others
  • Covers medical bills for individuals hurt on a homeowner’s property or by the homeowner’s pet.

Read more: Understanding Homeowners Insurance Coverage For Air Conditioning Units 

Where Can You Find Insurance Resources in California?

The California Far Access to Insurance Requirements (FAIR): For individuals that own “high-risk” properties, and who may have a hard time obtaining home insurance policies through private insurers. High-risk properties could include houses or buildings in high crime areas, or locations that experience frequent extreme weather, like coastal areas. Older homes with outdated electrical, plumbing or heating systems may also be deemed high-risk properties and be passed over for insurance by private companies. To contact the California FAIR Plan, call toll free (800) 339-4099 or (213) 487-0111.