Two of California’s largest home insurers, CSAA and Mercury Insurance, will raise rates by an average of 6.9% this year, according to filings with the California Department of Insurance.
CSAA, affiliated with AAA for northern and central California, will implement the rate increase for nearly 481,800 homeowners starting on March 15. Mercury Insurance, the third-largest home insurer in California, will adjust rates for over 650,000 customers beginning in July.
Homeowners will see an average rate increase of 8.2%, while condo owners and home renters will experience average decreases of 8.3% and 6.3%, respectively. The exact rate change will depend on individual wildfire risk, with some Mercury Insurance customers facing increases of up to 60% and decreases of up to 10% for others. CSAA’s rate changes will vary, with some homeowners seeing increases up to 8% according to the San Francisco Chronicle.
Both rate filings were approved under the Sustainable Insurance Strategy, a reform by Insurance Commissioner Ricardo Lara aimed at addressing California’s insurance crisis. The reforms promise to increase the availability of insurance in areas where it has become scarce. Mercury Insurance has committed to writing at least 2,000 more policies by July 2028 in “distressed” areas, including wildfire-prone regions like Paradise, California.
CSAA and Mercury Insurance attribute the need for rate increases to inflation and the risk of natural disasters like wildfires. However, both companies plan to offer new discounts to offset premium increases. Mercury will provide discounts for home hardening measures, which can reduce the wildfire portion of a premium by up to a third. CSAA will offer discounts for home hardening and guarantees renewals for homeowners who obtain a certificate from the Insurance Institute for Business and Home Safety as reported by the San Francisco Chronicle.
These changes come amid a challenging environment for California homeowners seeking insurance, particularly in wildfire-prone areas. While some insurers like Allstate and State Farm have paused new policy sales in California, others like Travelers continue to offer new coverage as detailed by Insurance.com.
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