CA Home Insurance in 2026: What You Need to Know

Home insurance might not be the most exciting topic, but when you need it… You really need it.

Obtaining - and keeping - property insurance has been particularly challenging recently. 

We sat down with Alex Bohannan of Goosehead Insurance to better understand what’s happening in the market — and what our clients should be doing now. Alex is a real pro. Resourceful and knowledgeable, he has helped several of our clients obtain policies over the past few years.  

Alex, can you help our readers understand why home insurance in California has become so challenging over the past few years?

The challenges are twofold.

First, there are the obvious factors: wildfire losses, rising rebuilding costs, and inflation. 

But the less obvious and perhaps more important driver is regulatory. For many years, the state of California denied or delayed rate increase requests. As losses mounted and carriers couldn’t adjust pricing fast enough to reflect risk, profitability eroded.

The result is that over the last three to four years, roughly 90% of major carriers have either stopped writing new home policies in California or dramatically reduced their exposure. 

We are now operating in a constrained market where insurance is much harder to obtain and significantly more scrutinized.

Our clients who already own homes are understandably worried about policy cancellations. Are there preventative measures they can take?

The easiest and most cost-effective preventative step is vegetation management. No trees or vegetation should touch or overhang the roofline. Ideally, there should be at least a five-foot clearance between the home and any vegetation. This is one of the first things carriers look for during inspections.

Roof age is another major factor. Most carriers prefer tile and flat roofs to be under 20 years old and shingle roofs under 15 years old. If a carrier does agree to insure an older roof, coverage may shift from replacement cost (new for old) to actual cash value (which factors in depreciation), resulting in lower claim payouts.

Electrical systems are also critical — especially in older homes. Active knob-and-tube wiring can present challenges. Additionally, certain electrical panel brands — including Zinsco, Stab-Lok, Challenger, and Federal Pacific — are widely considered uninsurable by many carriers. If a home has one of these panels, replacement is strongly recommended both for safety and insurability.

All of that said, sometimes there are unavoidable factors that lead to a cancellation, like a carrier deciding to pull out of a specific zip code. 

If someone does receive a notice of non-renewal, can they contest it? And how long do they typically have to find new coverage?

The good news is - yes, they can contest it!

For cancellations on new policies you typically get a month to find new insurance and for non-renewals you typically get 60 days.

For clients shopping for a new home, what are the biggest hurdles to obtaining a policy?

The most common hurdles are:

• Roof age

• Active knob-and-tube wiring

• Recalled or blacklisted electrical panels

• Homes over 100 years old

• High wildfire risk zones (which can be different from carrier to carrier)

I strongly recommend that buyers obtain an insurance quote on any house before writing an offer. In most cases, I can provide initial feedback for clients within 1-2 days. 

In the current climate, should homeowners try to avoid filing insurance claims if possible?

In short: yes, unless it will cause financial hardship. 

Once a claim is filed, it becomes part of the home’s loss history — and even a single claim can make obtaining future coverage more expensive or more difficult.

For that reason, if a homeowner can reasonably absorb the cost of a smaller loss, it may be worth considering.

*Important tip: Depending on your carrier, simply calling to ask for advice on whether or not to file a claim can trigger an increase in rate. Many carriers require their agents to report a claim the moment they have knowledge of it, even if the homeowner decides not to move forward with the claim. 

That's one of the advantages here at Goosehead; we are able to counsel our clients on the pros and cons of filing any particular claim after a loss event; and then let them make the final decision.  

Can you explain what the California FAIR Plan is, and what the pros and cons are?

The California FAIR Plan was originally designed as a last-resort insurance option for homeowners who could not obtain coverage in the private market. In today’s environment, it has become far more common.

The primary benefit is accessibility: it will insure many properties that private carriers decline.

However, there are significant limitations. The FAIR Plan primarily covers fire and smoke damage. It does not include standard homeowner coverages such as liability, theft, or water damage. As a result, homeowners must purchase a supplemental “Difference in Conditions” (DIC) policy to create more comprehensive coverage.

There is also a Total Insurable Value cap of $3 million, which is limiting for higher-value homes. 

Payouts after a claim might also move more slowly than private carriers, largely due to administrative processes and state oversight.

It's known for being a particularly expensive option, and it often is. But surprisingly sometimes I will run a comparison and find that the rates are competitive or even the lowest of available options. So cost is a hit-or-miss. 

We’ve heard the insurance market may begin to open back up. What is your forecast for 2026 and 2027?

In short, my forecast is: More available options, with increasingly higher rates. Sounds counterintuitive, right? 

I say that because if carriers can price risk appropriately, competition should gradually return. That would mean more availability and more options for consumers, but higher rates across the board. 

Rebuilding costs, labor, materials, and inflation have permanently shifted the baseline. It is unrealistic to expect premiums to return to levels seen a decade ago.

The more probable outcome is a more functional market — but at a higher cost for homeowners.

Final Thoughts

Home insurance in California has evolved from a routine closing item into a central part of homeownership strategy. As with many things, the best protection is early information — and a trusted advisor who understands how to navigate an increasingly complex landscape.

If you're looking for a great agent, here's how to get in touch with Alex:

Alex Bohannan

925-276-9905

[email protected]

https://goosehead.com/Alex-Bohannan