Understanding California’s changing insurance market, what it means for your next move, and how to prepare.
Last updated: October 30, 2026
Whether you’re buying your first home, moving to a new area, or getting ready to sell, there’s a lot to think about. California home insurance is one of those important details that isn’t always top of mind until you’re well into the process.
Across California, homeowners insurance can look very different depending on where you’re buying or selling. Properties along the coast may have different insurance considerations than homes in the mountains, where wildfire exposure and property-specific conditions can influence coverage options and costs.
With changes underway in California’s insurance market, here’s what we think buyers and sellers should know heading into 2027.
What’s Changing With California Homeowners Insurance?
You’ve probably heard about insurance companies limiting coverage in California over the past few years. Wildfire losses, rising construction and rebuilding costs, and changes in how insurers evaluate risk have all contributed to a more challenging insurance market.
Allstate stopped writing new California homeowners policies in 2022, followed by State Farm in 2023. In September 2026, the California Department of Insurance announced that both companies had filed plans to resume offering new residential coverage. Neither had reopened to new customers at the time of that announcement. [1]
One particularly interesting development is State Farm’s proposal to begin accepting new applications for homes that meet certain wildfire safety standards. For homeowners in areas like the Santa Cruz Mountains, this could make improvements such as defensible space and home hardening even more important when exploring insurance options. Eligibility would still depend on the property’s characteristics, location, and applicable underwriting requirements. [1]
There have been other encouraging developments as well. Farmers Insurance eliminated its monthly cap on new California homeowners policies in November 2025, allowing it to consider more applications, although individual properties still need to meet its underwriting requirements. [2]
California has also introduced its Sustainable Insurance Strategy, a series of reforms intended to encourage insurance companies to expand coverage, particularly in areas affected by wildfire risk. [3]
These are positive signs for California homeowners. While we can’t say yet exactly how these changes will affect insurance availability or costs, they offer some reasons to be cautiously optimistic about the direction of the market.
What to Know About Homeowners Insurance Before Buying a House in California
One of the best things you can do when considering a home is to start researching insurance options early. Ideally, this happens while you’re still evaluating the property, rather than waiting until you’re in escrow.
You don’t need to have a policy in place before making an offer, but understanding what’s available and what it might cost can help you make a more informed decision.
- Get a homeowners insurance quote for the property. One of the first things we recommend is reaching out to a licensed insurance agent or broker with the property’s address. Even if you’re just beginning to consider a home, having an idea of what coverage is available and what it might cost can be incredibly helpful. When comparing quotes, pay attention to deductibles, coverage limits, and exclusions, not just the premium. [4]
- Understand what your homeowners insurance covers. Not all policies offer the same protection, and some types of damage may require separate coverage. Flood and earthquake insurance, for example, are generally not included in a standard homeowners policy. A knowledgeable insurance professional can help you understand what’s covered, what’s excluded, and whether additional protection makes sense for the property.
- Factor homeowners insurance into your overall housing budget. Two homes with similar asking prices can have very different insurance premiums. Whether you’re financing your purchase or paying cash, it’s important to understand the full cost of owning the home, including insurance, property taxes, maintenance, and other ongoing expenses.
- Confirm insurance requirements and potential property improvements. If you’re financing the purchase, your lender will have specific insurance requirements. Depending on the property, an insurer may also request repairs or improvements, such as roof repairs, electrical updates, or wildfire mitigation measures, before providing or continuing coverage. Learning about these requirements early can help you plan ahead and avoid unexpected expenses or delays during escrow. [5]
What If Traditional Homeowners Insurance Isn’t Available?
If you’ve been told that a property may be difficult to insure, it doesn’t necessarily mean you should rule it out.
California’s FAIR Plan provides an alternative for homeowners who have difficulty obtaining coverage through traditional insurance companies.
The FAIR Plan offers basic property coverage, including fire protection, but it doesn’t provide everything you would typically find in a comprehensive homeowners policy.
In some cases, homeowners may also need a Difference in Conditions (DIC) policy to help fill those gaps. Depending on the policy, this additional coverage may include protection for things like water damage, theft, and liability. DIC policies are purchased separately from an insurance company, and the coverage available can vary. [6]
It’s also worth understanding the total cost. Combining FAIR Plan and DIC coverage can be more expensive than a traditional homeowners policy offering similar protection.
Does that mean a home requiring the FAIR Plan is automatically a bad choice? Not at all.
What matters is understanding your options before making a decision. A licensed insurance professional can help you compare coverage, understand potential costs, and determine whether the arrangement meets your lender’s requirements.
Why Is Homeowners Insurance More Expensive in Some Santa Cruz County Neighborhoods?
When looking at our own backyard, and this is true across the state, insurance costs can vary significantly from one property to another, even when homes are located in the same general area.
Insurance companies look at a variety of factors, including location, construction materials, the age and condition of the home, and exposure to risks such as wildfires.
For example, a home near the coast in Capitola or Aptos may have different insurance considerations than a property in Scotts Valley or the Santa Cruz Mountains communities of Felton, Ben Lomond, and Boulder Creek.
The condition of the property and improvements made over time can also make a difference.
California’s Safer from Wildfires program recognizes measures such as maintaining defensible space, using fire-resistant materials, and making improvements that help protect homes from wildfire damage. Some of these measures may also qualify homeowners for insurance discounts. [7]
The important takeaway is that you can’t always predict insurance availability or costs based on a home’s location or asking price alone. Every property is different, which is why getting information specific to the home you’re considering is so valuable.
What California Home Sellers Should Know About Homeowners Insurance
While sellers aren’t responsible for securing a buyer’s homeowners insurance, there are things you can do before listing your home that may help make the process easier for prospective buyers.
Being prepared with information about your property’s condition, improvements, and protective features can help buyers and their insurance professionals better understand the home.
- Document improvements and protective features. If you’ve made improvements to your property over the years, take some time to gather the details. Depending on the insurer, certain upgrades and safety features may influence how a home is evaluated.
Some examples include:
- Roofing and structural improvements: Roof replacements, fire-resistant roofing materials, and other relevant upgrades.
- Wildfire protection: Defensible space, vegetation management, ember-resistant vents, and other home-hardening measures.
- Plumbing and electrical updates: Replaced plumbing, electrical upgrades, leak-detection devices, and automatic water shutoff systems.
- Safety and fire protection: Monitored alarms, fire sprinkler systems, and, where relevant, nearby fire hydrants or emergency water supplies.
These improvements won’t guarantee insurance eligibility or discounts, but having accurate documentation available can be helpful when buyers begin exploring their options. [7] [8]
- Address property conditions that could affect insurance eligibility. Issues such as roof damage, outdated electrical systems, or plumbing concerns may affect an insurer’s willingness to provide coverage. If there are known issues that can reasonably be addressed before listing, doing so may help reduce the likelihood of unexpected insurance requirements during escrow.
How We Helped a Santa Cruz Mountains Seller Navigate Insurance Questions
We recently listed a property in the Santa Cruz Mountains that attracted buyer interest almost immediately. Given its rural location, we knew homeowners insurance could be a question for prospective buyers.
Rather than wait for that question to come up during escrow, we decided to research the options upfront.
We connected with a local insurance broker and shared information about the property’s protective features. The home was located in a Firewise neighborhood with multiple nearby fire hydrants, water storage tanks, and even a community fire engine.
The good news? We were able to identify a potential insurance option and obtain a preliminary quote.
While the quote was subject to underwriting and wasn’t a guarantee of coverage or pricing, it gave interested buyers something valuable: a clearer picture of what insurance for the property might look like.
We included that information in the property’s disclosure package so buyers could review it while evaluating the home. They would still need to obtain their own quotes and confirm eligibility with an insurance provider, but they had a useful starting point.
It’s a good example of how taking a little extra initiative on behalf of our sellers can also help buyers feel more comfortable and informed as they consider a property.
Will California Homeowners Insurance Improve in 2027?
There are reasons to feel cautiously optimistic about California’s homeowners insurance market heading into 2027.
The state’s regulatory reforms are intended to encourage more insurers to offer coverage, and recent announcements from major insurance companies suggest there may be more options on the horizon. [1] [3]
That doesn’t necessarily mean premiums will decrease or that every property will suddenly become easier to insure.
The market is still evolving, and insurance availability will continue to depend on the individual property and the companies offering coverage.
For buyers and sellers, the best approach is to stay informed, explore your options early, and make decisions based on the coverage and costs available when you’re ready to make a move.
Frequently Asked Questions About California Homeowners Insurance
Should I get a homeowners insurance quote before making an offer?
Yes. Getting a quote early can help you understand what coverage may be available and what it could cost before committing to a home. Just remember that preliminary quotes are subject to underwriting and may change.
Can you buy a house in California without traditional homeowners insurance?
Yes, depending on the coverage available and your lender’s requirements. If a traditional insurer declines coverage, alternatives such as California’s FAIR Plan may be an option. A licensed insurance broker can help you explore what’s available and whether additional coverage is needed. [9]
Does homeowners insurance transfer to the new owner when you sell a house?
No. Homeowners insurance generally doesn’t transfer to the new owner when a home is sold. Buyers will need to obtain their own policy, and their coverage options and premiums may differ from the seller’s.
Making an Informed Decision About Your Next Move
At Surf City Estates Group, we believe successful real estate transactions begin with thoughtful preparation, honest communication, and a clear understanding of the details that matter.
Homeowners insurance is just one piece of the process, but it’s an important one, especially as California’s insurance market continues to change.
Whether you’re buying or selling in Santa Cruz, Capitola, Aptos, Scotts Valley, or the Santa Cruz Mountains, our goal is to help you anticipate important considerations, understand your options, and connect with trusted professionals along the way.
If you’re considering a move in Santa Cruz County, we’d love to help you navigate the process with confidence.
Sources & References
[1] California Department of Insurance. Major California Home Insurers Move to Reopen for New Business, Including State’s Largest Insurer. September 18, 2026.
https://www.insurance.ca.gov/0400-news/0102-alerts/2026/Major-California-home-insurers-move-to-r.cfm
[2] California Department of Insurance. Farmers Insurance Market Announcement. May 12, 2026.
https://www.insurance.ca.gov/0400-news/0102-alerts/2026/California-s-second-largest-home-insurer.cfm
[3] California Department of Insurance. Sustainable Insurance Strategy.
https://www.insurance.ca.gov/01-consumers/180-climate-change/Sustainable-Insurance-Strategy.cfm
[4] California Department of Insurance. Residential Insurance: Homeowners and Renters.
https://www.insurance.ca.gov/01-consumers/105-type/95-guides/03-res/res-ins-guide.cfm
[5] Fannie Mae. Property Insurance Requirements for One- to Four-Unit Properties.
https://selling-guide.fanniemae.com/sel/b7-3-02/property-insurance-requirements-one-four-unit-properties
[6] California FAIR Plan. Difference in Conditions (DIC) Coverage.
https://www.cfpnet.com/difference-in-conditions-dic/
[7] California Department of Insurance. Safer from Wildfires.
https://www.insurance.ca.gov/01-consumers/200-wrr/Safer-from-Wildfires.cfm
[8] Insurance Information Institute. 12 Ways to Lower Your Homeowners Insurance Costs.
https://www.iii.org/article/12-ways-to-lower-your-homeowners-insurance-costs
[9] California Department of Insurance. Top Ten Tips for Finding Residential Insurance.
https://www.insurance.ca.gov/01-consumers/105-type/5-residential/Top10Tips_FindingResidentialIns.cfm
This article is for general educational purposes and isn’t insurance, legal, or financial advice. Coverage, eligibility, and lender requirements vary. Consult a licensed insurance professional about your specific property.