California Insurance Rate Trends 2026 - What's Changing and How to Prepare

If you received your insurance renewal notice recently and saw a rate increase, you're not alone. Insurance rates across California are rising—in some cases significantly—and 2026 is shaping up to be another challenging year for consumers.

The average California homeowner is seeing rate increases of 8-15%, while auto insurance rates are climbing 5-12%. Some homeowners in high-risk areas are facing increases of 20-30%, and a growing number are being non-renewed entirely.

This isn't random bad luck. There are specific, measurable reasons why rates are rising, and understanding them helps you make smarter decisions about your coverage.

More importantly, there are concrete strategies to offset these increases without sacrificing protection. Let's break down exactly what's happening, why, and what you can do about it.

The Big Picture: Why Insurance Rates Are Increasing

Three primary forces are driving rate increases across the insurance industry:

1. Inflation and Rising Costs

Everything costs more to repair and replace:

Auto insurance:

• Average vehicle repair costs up 32% since 2020

• New car prices up 25% since 2020

• Car rental costs during repairs up 40%

• Medical costs up 22% since 2020

Home insurance:

• Construction costs up 35-45% since 2020

• Labor shortages driving contractor costs higher

• Building materials remain expensive

• Supply chain issues persist

When it costs more to repair or replace, insurers pay more in claims. Those increased costs get passed to policyholders through higher premiums.

2. Catastrophic Losses

California (and the U.S. generally) is experiencing more frequent and severe catastrophic events:

Recent data:

• 2023: $92 billion in U.S. insured catastrophic losses

• 2022: $115 billion in U.S. insured catastrophic losses

• 2021: $99 billion in U.S. insured catastrophic losses

California-specific challenges:

• Wildfires causing billions in losses

• Atmospheric rivers and flooding

• Severe storms and wind damage

When insurers pay out billions in catastrophic claims, they must raise rates to remain solvent and maintain reserves required by regulators.

3. Increased Claim Frequency

More claims are being filed, and claim severity (average cost per claim) is rising:

Auto insurance:

• Distracted driving leading to more accidents

• More expensive vehicles on the road (EVs, luxury SUVs)

• Higher medical costs per accident

• Increased litigation and settlement costs

Home insurance:

• More frequent severe weather events

• Water damage claims increasing

• Liability claims becoming more expensive

• Legal system social inflation (juries awarding larger verdicts)

The combination of more claims and higher costs per claim creates upward pressure on rates.

California-Specific Factors Affecting Rates

California has unique characteristics that impact insurance pricing:

Proposition 103 Rate Regulation

California's Proposition 103 requires insurance companies to get Department of Insurance approval for rate increases. This is good for consumers in that it prevents arbitrary rate hikes, but it also means:

• Carriers can't quickly adjust to changing costs

• When approval comes, increases may be larger to catch up

• Some carriers choose to exit California rather than wait for approvals

Wildfire Crisis

California's wildfire situation is the most significant driver of homeowners insurance rate increases:

• $30+ billion in wildfire claims over the past decade

• Expansion of wildfire-prone areas due to development

• Climate patterns increasing fire frequency and severity

• Some carriers exiting high-risk areas entirely

Many Cerritos and Orange County homeowners don't realize their rates are affected even if they're not in fire-prone areas—carriers spread wildfire risk across all California policyholders.

Litigation Environment

California's legal environment contributes to higher insurance costs:

• Larger jury verdicts in liability cases

• More frequent lawsuits

• Higher attorney fees

• "Social inflation" (juries awarding more than in the past)

This primarily affects liability coverage (both auto and home), driving those costs higher.

FAIR Plan Challenges

The California FAIR Plan (last-resort insurance for high-risk properties) is expanding rapidly:

• Now insuring 400,000+ properties (up from 150,000 in 2019)

• FAIR Plan costs more and provides less coverage

• More homeowners being non-renewed by traditional carriers

• Creates additional market instability

2026 Rate Increase Projections by Coverage Type

Here's what we're seeing and expect for 2026:

Homeowners Insurance: 8-15% Average Increase

What's driving it:

• Catastrophic losses (wildfires, storms)

• Construction cost inflation

• Increased water damage claims

• Rising liability costs

Regional variation:

• Urban areas: 8-12% increases

• Fire-prone areas: 15-30% increases

• Coastal areas: 10-18% increases

Some carriers in California are:

• Non-renewing policies in high-risk areas

• Reducing coverage limits

• Increasing deductibles

• Exiting the California market entirely

Bottom line: If you haven't shopped your homeowners insurance in 2+ years, you're likely paying 20-40% more than you should.

Auto Insurance: 5-12% Average Increase

What's driving it:

• Vehicle repair cost inflation

• Medical cost inflation

• Increased accident frequency (post-pandemic driving patterns)

• Rising cost of new vehicles

Who's seeing the largest increases:

• Teen drivers: 10-15%

• Recent accident claims: 15-25%

• Urban areas with high theft: 8-15%

• Drivers with credit score changes: Variable

Good news: Auto insurance increases are more moderate than home, and competition remains strong. Shopping can still yield significant savings.

Bottom line: Most drivers can find 10-30% savings by comparing quotes from multiple carriers.

Umbrella Insurance: 3-8% Average Increase

What's driving it:

• Larger liability verdicts

• Increased litigation

• Social inflation

Good news: Umbrella policies remain the best insurance value—$1-2M in additional liability coverage for $200-400/year.

Bottom line: If you don't have umbrella insurance and have significant assets, add it now before rates increase further.

Business Insurance: 7-15% Average Increase

What's driving it:

• Commercial property values rising

• Higher liability claims

• Cyber insurance becoming more expensive

• Workers' compensation costs increasing

Most affected:

• Businesses with employees (workers' comp increases)

• Businesses with physical locations (property + liability)

• Tech companies (cyber insurance)

Bottom line: Business insurance is essential, but shopping can help offset rate increases. Many business owners overpay by not comparing options.

Which Insurance Carriers Are Raising Rates Most in 2026?

Based on filed rate changes with the California Department of Insurance and our experience with hundreds of quotes, here's what we're seeing:

Major Rate Increases (10-20%+)

Several major carriers filed for significant increases:

• State Farm: 20-30% home insurance increases, selective non-renewals in high-risk areas

• Allstate: 15-25% home insurance increases, exiting some California markets

• Farmers: 10-18% across home and auto

Moderate Rate Increases (5-12%)

Many carriers filing moderate increases:

• CSAA: 8-12% home, 5-8% auto

• Mercury: 6-10% home, 4-7% auto

• Progressive: 7-11% auto

• Nationwide: 8-14% home

Below-Average Increases (0-7%)

Some carriers remaining more competitive:

• AAA: 3-8% increases

• Wawanesa: 4-9% increases

• Regional carriers often staying below 10%

Important note: These are averages. Your specific rate increase depends on your location, coverage, claims history, credit score, and other individual factors.

Key takeaway: Just because your carrier raised rates 20% doesn't mean all carriers did. Shopping is critical.

Regional California Rate Trends

Different areas of California are experiencing different rate pressures:

Los Angeles & Orange County (Including Cerritos)

Homeowners:

• 8-12% average increases

• Relatively stable market (not high wildfire risk)

• Some carriers non-renewing homes with old roofs or outdated systems

• Water damage claims driving some increases

Auto:

• 6-10% average increases

• Theft rates affecting comprehensive coverage costs

• Urban density contributing to collision frequency

Outlook: More stable than Northern California and mountain communities, but still seeing consistent increases.

San Francisco Bay Area

Homeowners:

• 10-15% average increases

• Some wildfire exposure in surrounding areas

• Higher property values driving larger premium increases

• Earthquake insurance becoming more expensive

Auto:

• 7-12% average increases

• High cost of repairs (labor costs)

• Vehicle theft issues

Northern California (Fire-Prone Areas)

Homeowners:

• 20-40% increases common

• Many carriers non-renewing policies

• FAIR Plan becoming only option for many

• Property values + fire risk = expensive coverage

Auto:

• 5-9% increases (less affected)

Central Valley

Homeowners:

• 12-18% increases

• Agricultural risks

• Flood concerns in some areas

• Growing wildfire proximity

Auto:

• 5-8% increases

San Diego Area

Homeowners:

• 10-16% increases

• Some wildfire exposure

• Property values driving costs

• Water damage claims

Auto:

• 6-10% increases

Strategies to Offset Rate Increases

Here are specific, actionable strategies to reduce your insurance costs even as rates rise:

Strategy #1: Shop Your Insurance Aggressively

This is the single most effective strategy.

Why it works: Carriers price differently based on their current book of business, loss experience, and target demographics. The carrier that gave you the best rate three years ago may not be competitive today.

How much you can save: 15-40% on average for clients who haven't shopped in 3+ years.

How to do it right:

1. Get quotes from 5-10 carriers (we do this for you in one call)

2. Compare identical coverage (same limits, same deductibles)

3. Look at total cost (home + auto bundled)

4. Consider carrier stability and service quality, not just price

When to shop:

• At least every 2-3 years

• Immediately if your rates increased 10%+ at renewal

• Within 30 days of any major life change

Real example: A Cerritos homeowner came to us after a 22% rate increase from their carrier of 8 years. We found them identical coverage for 18% less than their OLD rate—a total savings of 36% compared to the renewal offer.

Action item: Call us at (562) 402-1737 for comparison quotes from multiple carriers.

Strategy #2: Increase Your Deductibles Strategically

Higher deductibles = lower premiums.

The math:

• Increasing home deductible from $1,000 to $2,500: Saves $150-300/year

• Increasing home deductible from $1,000 to $5,000: Saves $300-600/year

• Increasing auto deductible from $500 to $1,000: Saves $100-250/year

When this makes sense:

• You have emergency savings to cover the higher deductible

• You rarely file small claims

• You want to lower premiums without reducing coverage limits

When to avoid this:

• You don't have savings to cover a $2,500 or $5,000 deductible

• You're already at a high deductible

• You're in a high-claim-frequency situation

Sweet spot: Most people benefit from a $1,000-2,500 deductible for home, $500-1,000 for auto.

Action item: Ask us to quote both your current deductible and one level higher to see the savings.

Strategy #3: Bundle Multiple Policies

Multi-policy discounts are substantial.

Typical savings:

• Home + Auto: 15-25% on both policies

• Home + Auto + Umbrella: 20-30% on all policies

• Business + Commercial Auto: 10-20%

Why it works: Carriers reward customer loyalty and want your full relationship. They price more competitively when they have multiple policies.

Example: A Cerritos family was paying $1,800 for home and $2,400 for auto with two different carriers ($4,200 total). By bundling both with one carrier, they paid $3,150 total—a $1,050 annual savings (25%).

Action item: Always quote your insurance bundled. Even if your current carriers won't bundle, many others will.

Strategy #4: Maximize Your Discounts

Most people miss discounts they qualify for.

Common missed discounts:

For Home Insurance:

• Security system: 5-15% savings

• Fire alarm: 5-10% savings

• Smart home devices: 5-10% savings

• New roof: 10-20% savings

• Gated community: 5-10% savings

• Claims-free history: 10-25% savings

For Auto Insurance:

• Good student: 15-25% savings (B average or better)

• Defensive driving course: 5-15% savings

• Low mileage: 10-20% savings (under 7,500 miles/year)

• Safety features: 5-15% savings

• Bundling: 15-25% savings

• Paperless/auto-pay: 3-7% savings

Action item: Call us for a discount audit. We'll identify every discount you qualify for.

Strategy #5: Improve Your Risk Profile

Insurers price based on perceived risk. Lower your risk, lower your rate.

For Home Insurance:

• Install security system

• Upgrade to impact-resistant roof

• Update electrical/plumbing

• Add smart water leak detectors

• Maintain good credit

For Auto Insurance:

• Take defensive driving course

• Improve credit score

• Reduce annual mileage

• Add safety features (dashcam, blind spot monitoring)

• Avoid claims/tickets

Timeline: Most improvements take 6-12 months to impact rates, but savings persist for years.

Action item: Ask which improvements would reduce your rates most.

Strategy #6: Review Coverage for Over-Insurance

Sometimes you're paying for coverage you don't need.

Common areas of over-insurance:

Auto:

• Comprehensive/collision on older vehicles (if value < $3,000, consider dropping)

• Rental reimbursement if you have multiple vehicles

• Roadside assistance if you have AAA

Home:

• Insuring for more than replacement cost

• Excessive personal property coverage

• Riders for items you no longer own

Warning: Don't confuse over-insurance with proper insurance. Cutting liability limits to save money is dangerous. We're talking about eliminating truly unnecessary coverage only.

Action item: Let us review your coverage for potential areas to trim without creating gaps.

Strategy #7: Consider Usage-Based Insurance (Telematics)

For good drivers, usage-based insurance can save 10-30%.

How it works:

• Install app or device that monitors driving habits

• Discounts based on safe driving behavior (no hard braking, no speeding, low mileage)

• Can save 10-30% for good drivers

Best for:

• Safe drivers with clean records

• Low-mileage drivers

• People who don't mind being monitored

Not ideal for:

• High-mileage drivers

• Urban drivers (more hard braking in traffic)

• Privacy-concerned individuals

Carriers offering programs: Progressive Snapshot, State Farm Drive Safe & Save, Allstate Drivewise, others.

Action item: Ask about telematics programs if you're a good driver.

Strategy #8: Review Your Coverage Annually

Insurance isn't set-it-and-forget-it.

What to review annually:

• Are your liability limits still appropriate?

• Have you acquired new assets that need coverage?

• Are you taking advantage of all discounts?

• Have you comparison shopped recently?

• Is your coverage adequate for current replacement costs?

Why this saves money: Catching over-insurance, under-insurance, and missed discounts early prevents long-term overpayment.

Action item: Schedule an annual review every January. It takes 30 minutes and typically finds savings or identifies gaps.

What If Your Carrier Non-Renews Your Policy?

Non-renewals are increasing in California, especially for homeowners in certain areas. Here's what to do:

Don't Panic

Non-renewal doesn't mean you're uninsurable—it means that carrier chose to exit your area or stop offering coverage for certain risk types.

Act Quickly

You typically receive 75 days notice. Start shopping immediately—don't wait until the last minute.

Understand Why

Common reasons for non-renewal:

• High wildfire risk area

• Old roof or outdated systems

• Multiple claims

• Carrier exiting California market

Know Your Options

1. Shop other standard carriers - Many independent agents (like us) represent 10-20 carriers. One may accept you.

2. California FAIR Plan - Last-resort option, more expensive, limited coverage, but available.

3. Surplus lines carriers - Specialty insurers for hard-to-place risks.

4. Make improvements - Fix roof, update systems, clear brush—then shop again.

Get Professional Help

Independent agents know which carriers are writing in which areas and can place you faster than shopping alone.

Action item: If you received a non-renewal notice, call us immediately at (562) 402-1737. We'll find you coverage.

When Switching Insurance Makes Sense (And When It Doesn't)

Not every rate increase warrants switching carriers. Here's how to decide:

Switch If:

• Rate increased 10%+ with no claims: This suggests you're being priced out. Shop immediately.

• You haven't shopped in 3+ years: You're almost certainly overpaying.

• You found 15%+ savings with comparable coverage: Meaningful enough to justify switching.

• Your current carrier's service is poor: Price + service matters.

Stay If:

• Rates are competitive after shopping: If quotes come back higher, you're in a good spot.

• You recently had a claim: Switching immediately after a claim can trigger surcharges with new carrier.

• You value the relationship: If your agent provides excellent service and rates are within 10% of competitors, staying can make sense.

• You're in a difficult-to-insure situation: If your current carrier is one of few willing to insure you, maintain the relationship.

Consider This:

Loyalty to an insurance company that raised your rates 40% over three years isn't loyalty—it's overpaying. Carriers don't reward loyalty with lower rates; they reward new customers.

The best strategy: Shop every 2-3 years, and switch if you find better value.

How Independent Agents Help You Navigate Rate Increases

Here's how working with an independent agent like Pinoy General Insurance helps:

We Shop Multiple Carriers for You

Instead of calling 10 companies individually, you call us once. We shop 5-10 A-rated carriers and bring you the best options.

We Know Which Carriers Are Competitive

We quote hundreds of policies and see pricing patterns. We know which carriers are competitive for your specific situation.

We Explain Coverage Differences

Not all policies are identical. We ensure you're comparing apples to apples and understand what you're buying.

We Advocate During Rate Increases

When your rates increase, we can immediately shop your coverage with other carriers to leverage better pricing.

We Handle the Paperwork

Switching insurance involves cancellations, new applications, and coordination. We handle all of it.

We Provide Ongoing Service

We're here for the life of your policy—not just at purchase. Claims, changes, questions—we're your advocate.

Take Control of Your Insurance Costs in 2026

Rate increases are real, but they're not inevitable for you personally.

While the insurance market is challenging, the clients who take action—who shop regularly, maximize discounts, and work with independent agents—consistently find better coverage at better prices than those who passively accept rate increases.

Here's your action plan:

This week:

1. Review your most recent renewal notices

2. Note any rate increases

3. Calculate your total annual insurance cost (home + auto + umbrella + business)

Next week:

1. Call us for comparison quotes: (562) 402-1737

2. Provide your current coverage details

3. Review your discount eligibility

Within 30 days:

1. Receive and compare quotes

2. Make an informed decision

3. Switch or stay based on value and coverage

4. Implement any coverage improvements

The bottom line: Most of our clients who haven't shopped in 2-3 years save $500-1,500 annually by comparing options. That's money in your pocket, not the insurance company's.

Ready to see if you're overpaying?

Contact Pinoy General Insurance Services:

• Call: (562) 402-1737

• Email: info@pinoygeneralinsurance.com

• Visit: 17304 Norwalk Blvd, Cerritos, CA 90703

• Web: pinoygeneralinsurance.com

We'll shop your insurance with 5-10 carriers, compare quotes, and show you exactly where you stand. No obligation, no pressure—just clarity.

Let's make 2026 a year where you control your insurance costs instead of letting them control you.

Frequently Asked Questions

Why are California insurance rates higher than other states?

California faces unique challenges: high property values, wildfire risk, earthquakes, high cost of living (affecting claims costs), and litigation-friendly environment. All contribute to higher rates.

Can I negotiate my insurance rates?

Not directly, but you can shop for better rates with other carriers and use those quotes to leverage better pricing. Independent agents do this for you efficiently.

Will filing a claim cause my rates to increase?

Usually, yes—though the amount varies by carrier and claim type. Small claims (under $1,000) may not be worth filing due to potential rate increases. Large claims (over $5,000) are typically worth filing despite rate impacts.

How long do claims stay on my record?

Typically 3-5 years. Your insurance history report (CLUE report) shows claims for 7 years, but most carriers only surcharge for 3-5 years.

Should I use the California FAIR Plan?

Only as a last resort. FAIR Plan provides limited coverage at high cost. Exhaust all standard market options first. Many independent agents can place risks that consumers can't place on their own.

What's the best way to lower my insurance costs?

Shop regularly (every 2-3 years), bundle policies, maximize discounts, increase deductibles strategically, and work with an independent agent who can access multiple carriers.

Are online insurance companies cheaper?

Sometimes, but not always. Online companies offer convenience but limited coverage options and no personalized service. Independent agents often match or beat online prices while providing superior service.

Last Updated: January 2026

This blog post is for informational purposes only. Rate trends and projections are based on current market data and may change. Individual rate changes vary based on personal factors. Contact Pinoy General Insurance Services for personalized rate quotes and advice.