Have you looked at your insurance renewal bill this year? You might be in for sticker shock. From homeowners to renters to housing providers, Californians are all getting hit by soaring insurance costs.
Insurance is squeezing family budgets, with premiums increasing from nearly 7% and up to 30% or more for “high-risk” properties. Many rental housing providers in San Diego County are experiencing similarly steep increases.
Unfortunately, the insurance problem has become a housing problem – because high costs drive up costs for homeowners and renters alike. While renters may not pay insurance premiums directly, they are affected by insurance costs. After all, a landlord’s insurance bill will eventually be reflected in rent prices.
This issue has become impossible to ignore. In recent months, there has been criticism of California regulators as insurers are seeking major rate increases. Mercury, CSAA, USAA and Farmers are raising rates this year.
Nearly one million California policyholders could be affected by pending or recently approved insurance increases. As one example, after massive wildfire payouts, State Farm sought and received emergency rate increases in 2025, including substantial rises for rental housing properties. Even after the deal was scaled back, landlords still face a staggering 32.8% increase.
The challenges extend beyond rising premiums. Insurers have restricted coverage or entirely withdrawn from wildfire-prone areas, forcing some housing providers onto California’s FAIR Plan – the state’s insurer of last resort – where annual coverage costs can run $20,000 to $24,000 higher than a standard policy.
That number matters because insurance is not an optional expense. Housing providers are required to carry insurance to protect tenants, employees, lenders, and the properties themselves. Without coverage, many rental properties cannot operate.
And this is not just affecting large apartment communities. Small housing providers are getting hit especially hard.
Many rental owners in California operate just one or two properties. These are retirees who invested in a duplex for retirement income, families who rent out a former home, or small business owners trying to maintain older apartment buildings. They are now opening renewal notices showing premiums that have, in some cases, doubled. Others are being forced into higher deductibles, reduced coverage, or expensive surplus-line policies simply to remain insured.
At the same time, they are also facing rising maintenance costs, higher utility rates, increased labor expenses, and growing property tax burdens. Compounding the problem, California rent control laws cap most annual rent increases at roughly 5% to 10%, depending on inflation, making it nearly impossible for housing providers to absorb or recover sudden insurance increases.
So, why is insurance so expensive? The National Apartment Association recently highlighted the national insurance crisis facing rental housing providers, driven by natural disasters, construction inflation, and rising rebuilding costs.
California, unfortunately, sits at the center of this storm as wildfire risk has changed how insurers evaluate properties across the state. Even housing providers located far from fire zones are seeing major increases because insurers are spreading risk across their California portfolios.
Too often, the conversation about housing costs overlooks the rising costs of insurance. But as insurance costs climb, they ripple throughout the housing market, making it more expensive to own, maintain and provide housing.
We can’t ignore insurance rates if California wants housing to remain available and affordable.
Just as commuters are struggling to afford spiking gas prices, housing providers are straining under out-of-control insurance bills. We need to stabilize insurance costs for housing providers – and for all of us.
Alan Pentico, CAE, is the executive director of the Southern California Rental Housing Association.
