California Homeowners Face Rising Insurance Costs Despite Average Rates Being Below National Levels

While insurance affordability is an increasingly urgent issue nationwide, California homeowners continue to report relatively modest average costs compared to many other states.

Data from the U.S. Census Bureau and the Realtor.com® 2025 Climate Risk Report, show that even with wildfire exposure driving concerns in parts of the state, California households as a whole are paying less than homeowners in storm-prone coastal regions.

But will that average hold, given the devastation of the 2025 wildfires and the continued issues with coverage in some parts of the state?

California’s Insurance Costs Stay Affordable For Now

The latest American Community Survey (ACS) data from the U.S. Census Bureau shows that in 2024, California homeowners with a mortgage typically pay $1,000–$1,499 annually for homeowners insurance, while those without a mortgage pay in the same $1,000–$1,499 range. Overall, costs also fall between $1,000–$1,499 statewide.

California has 7,701,876 insured homeowner households in total—5,093,384 with a mortgage and 2,608,492 without. Among mortgaged owners, 394,890 pay less than $100 annually and 551,410 pay $4,000 or more. Among those without a mortgage, 478,518 pay less than $100 and 234,235 pay $4,000 or more.

Compared to nearby states, California’s average looks low. Oregon and Nevada both report costs in the $1,000–$1,499 range for mortgaged households, along with Arizona and Idaho.

To the East, however, Colorado and Texas are much higher: mortgaged homeowners in both states typically pay $2,000–$2,499 each year. The stark difference underscores how California’s averages—though hiding pockets of unaffordability—remain far lower than the storm-exposed Gulf states, where thousands of homeowners face bills above $4,000 annually.

"Insurance costs are increasingly shaping affordability, especially in this high-rate, high-priced environment," says Realtor.com senior economist Jake Krimmel. "It’s just another added, and quite necessary, cost for owning today and moving forward."

Climate Risks Remain a Major Factor

Although average costs are lower, California remains one of the nation’s epicenters for climate-related risk. The Realtor.com 2025 Climate Risk Report found that 5.6% of U.S. homes—worth $3.2 trillion—face severe or extreme wildfire risk, and nearly 39% of that value is in California.

Several California metros rank near the top nationally for wildfire exposure. Los Angeles has nearly $476.5 billion in home value at severe or extreme wildfire risk, while Riverside has $474.4 billion, representing more than 62% of its housing stock. San Francisco also appears on the list, with nearly $275 billion in homes exposed.

"Disaster risk varies widely by geography, with coastal areas obviously susceptible to hurricane-related damage a prime example,” explains Krimmel. “But flood risk extends into the heartland, too, especially for properties located near rivers and their flood plains. This is not to mention tornado alley in the Plains or wildfire risk on the West Coast.” 

Krimmel adds that regulatory environments also play a key role.

“The California government, for example, is stepping in to try to control costs directly. The flip side of this, unfortunately, is it can cause insurers to exit the state or for them to rely on policyholders in other less-risky states to effectively cross-subsidize California’s climate risk.”

This widespread exposure has reshaped the state’s insurance market. Private carriers have reduced their presence in high-risk areas, pushing more households toward the state’s FAIR Plan. As of mid-2025, the FAIR Plan reported $650 billion in exposure, up 42% from just nine months earlier. That surge reflects both insurer withdrawals and the growing difficulty Californians face in securing affordable coverage.

Insurance Affordability A Growing National Concern

California’s experience fits within a broader national trend. The Realtor.com 2025 Insurance Affordability Report found that 75% of Americans believe homeowners insurance could soon become unaffordable, and nearly half said they have already encountered difficulties obtaining or renewing policies.

These concerns are reshaping how buyers search. 30% of homebuyers reported completely changing their target areas due to insurance challenges, and nearly a quarter said they had entirely overhauled their buying strategy. For younger buyers especially, the risk of going without coverage looms large: 76% of Gen Z homeowners said they would consider dropping insurance if costs rise further, compared with 58% overall.

For now, California’s statewide averages remain relatively low, keeping homeowners insulated from the worst national affordability pressures. But given the outsized wildfire risk concentrated in major metros, the state illustrates how average numbers can mask steep challenges for residents in vulnerable areas.

This article was produced with editorial input from Dina Sartore-Bodo, Gabriella Iannetta, and Allaire Conte.