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It's no secret that homeowners insurance rates in California have climbed rapidly this year. Severe wildfire damages and high rebuilding costs have pushed several insurers, including State Farm, California's largest home insurer, to stop writing new policies there.
Several insurers have also requested rate hikes, and one well-known company just got the green light for a 34.1% increase set to take effect in November. Here's what residents need to know.
Allstate customers will see rate hikes come November
Allstate is California's sixth-largest home insurer, covering more than 350,000 properties in the state. It initially filed for a 39.6% rate increase with the California Department of Insurance in 2023, in response to rising costs and an increased number of wildfire claims. In January 2024, it dropped its request to a 34.1% increase, which the state recently approved.
These rate hikes will go into effect as of Nov. 1, 2024. However, homeowners who have recently renewed their Allstate homeowners insurance policy may not notice the effects until their next policy period.
The move isn't without controversy, as it'll undoubtedly make a significant impact on many Californians' budgets. But interestingly, Consumer Watchdog, a consumer advocacy group that often opposes these rate hikes, has come out in support of Allstate's move. It believes the rate hike is justified in this instance, due to rising costs.
The increase will ensure that Allstate continues to write new home insurance policies in the state, at least for the time being. This is crucial, as California homeowners have found themselves with fewer and fewer options over the last several years.
What can homeowners do?
Allstate customers worried about rate hikes don't need to take any action just yet. Allstate should reach out to homeowners in advance of the policy renewal date with their new premium amount. If it's too expensive, it might be time to explore other options.
It's best to get quotes from three to five insurers before settling on one. Premium costs are the most important factor for most people, but they're not the only one that matters. Also look at the coverage options, deductibles, and customer service when choosing which company to go with.
California homeowners who are building a new home or looking to remodel an existing property should consider using fire-resistant building materials. This might add to the upfront cost of the project, but many home insurers offer discounts to homeowners who take actions like this to reduce the likelihood of a claim.
Those who own vehicles would also do well to bundle their home and car insurance with the same company. This often leads to significant savings on both policies.
Finally, raising the policy's deductible is another surefire way to lower premiums. The downside to this is that it results in higher out-of-pocket costs in the event of a claim. But this may not be a concern for homeowners who are able to save for these costs in an emergency fund.
Californians who can't find any home insurance they're comfortable with right now should choose the policy they can best afford at the moment and continue to shop around every six months or so. California's Department of Insurance is currently working toward a more sustainable insurance strategy, so better options may become available in the future.
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