California has some of the highest homeowners insurance rates in the nation. So how do you get cheap California homeowners insurance? Here's how ...

Homeowners Insurance Coverage

Homeowners insurance provides coverage for damage to your home and your personal property caused by fire, lightning, theft, water damage, vandalism, and burglary. It also protects you and your family against liability lawsuits.

Go Shopping

The difference between one insurance company's policy and another's can be $1,000 or more, so it pays to shop for rates. There are websites where you can go to get quotes from a number of different companies. Some of these sites even have a chat feature where you can get advice from an insurance expert (see link below).

Raise Your Deductible

The deductible is the amount you have to pay on a claim before your insurance kicks in. Raising your deductible from $250 to $1,000 can save you 24% or more on your insurance. This not only decreases your premium, it also decreases you chances of being dropped by your insurance company for filing too many claims.

Combine Your Insurance

Purchasing your homeowners and auto insurance through the same company will save you as much as 15% on your premium. This also gives you the benefit of only having to pay one bill and deal with one insurance company.

Get Discounts

Most insurance companies will give you a discount on your premium for the following:

* Safety systems - fire alarms and sprinkler systems.
* Security systems - burglar alarms, security lights, dead bolt locks.
* Senior discount - If you're a retired senior some companies will give you 10% discount.

Check Them Out

Getting the best price for your homewowners insurance doesn't mean you're getting the best deal. You should check out the company you choose with your state's department of insurance to make sure it's a reputable company and will pay your claims.

The California Department of Insurance has ordered Allstate Insurance to cut its homeowner's insurance rates by 28.5 percent, one of the largest cuts ever required. On average, the each of the 50,000 Allstate ratepayers in California will save approximately $243 in premiums.

A complaint filed last year by the non-partisan group Consumer Watchdog challenging a proposed 9.8% increase in premiums led the decision.

"For the Insurance Commissioner to not only reject Allstate's request for a rate increase, but to also accept our arguments for a substantial decrease, is a tremendous victory for California homeowners," stated Los Angeles attorney Daniel Y. Zohar. "In these times of economic uncertainty, hundreds of thousands of consumers will be able to keep more of their hard-earned money, rather than have to line the ever-swelling pockets of Big Insurance.

Obviously disappointed, Allstate has state it will comply with the ruling.

January, 2006
By The California legislature recently made the following changes to the laws regulating insurance in California.   The bill requires the Curriculum Committee of the Department of Insurance to make recommendations to the Insurance Commissioner to instruct fire and casualty broker-agents and personal lines broker-agents in proper methods of: 1) estimating the replacement value of structures; and, 2) estimating appropriate levels of homeowners' coverage.
  The bill requires that, for a covered loss relating to a declared "state of emergency" - as that term is defined by the Government Code - additional living expense coverage "shall be" for a period of 24 months, although such coverage is still to be governed by all applicable policy provisions (including policy limits).
  Finally, and perhaps most notably, insurers are now required to provide insureds with a list of items that the insurer "believes may be covered under the policy." Although the bill allows the Department of Insurance to develop a list of these potentially covered items, it does not require that the Department develop the list, nor does it state whether an insurer may rely on that list without reservation or must do so only at its peril.

Finding cheap or affordable homeowners insurance in California can be a little tricky with the number of natural disasters that plague the state in the form of earthquakes, fires, mudslides, and floods. However, it is possible to find a cheap CA home insurance policy.

The natural disasters that happen in California have brought about some special regulations in insurance, especially homeowners insurance in CA.  One of these regulations forces California  homeowners insurance companies to justify what they charge for premiums to the California Insurance Commissioner. 

 

Comparing insurance companies and insurance policies in California is going to make all the difference in the world in finding cheap or affordable rates that will cover your home and personal property without taking a huge toll on your pocket book. To find cheap CA homeowners insurance quotes the easy way just plug your zip code into the tool at the top of the page and get quotes from multiple insurance companies.

 

Understand Coverage Options First,
Then Shop For The Cheapest
California Home Insurance Policy

There are three major types of coverage you can buy as well as Building Code Upgrade Coverage that will pay for any building code upgrades that need to be made when rebuilding your home.  Some companies cover this automatically, others require additional coverage.

 

• Cash Value - This policy will replace your home and possessions after deducting for depreciation.

  
  
  

• Replacement Cost - This policy covers repairing or rebuilding your home as well as replacing your possessions without accounting for depreciation.

  
  
  

• Guaranteed or Extended Replacement Cost - This is the highest level of insurance you can purchase.  Guaranteed replacement cost policy pays whatever it costs to rebuild your home prior to the disaster, taking into account inflation and the cost of building materials, even if it exceeds policy limits.  Some insurance companies only offer extended replacement costs up to 20% of the cost of your home.

  
  
  
  

What California Homeowners
Insurance Covers

 

• Dwelling - This includes your house, detached garage and storage sheds from fire, lightning, tornadoes, wind storms, hail, explosions, smoke, vandalism (including vandalism caused by riots), theft, aircraft and vehicles.

  
  
  

• Personal Property - This is your furniture, clothing, computer, TV, and other personal belongings.  The typical limit is 50% of the cost of your home.  However, in some circumstances, you can buy additional coverage for things such as fur, jewelry, art and special collections.

  
  
  

• Additional Living Expenses and Loss of Use - If you have to stay in a hotel or rent a temporary apartment while your home is being rebuilt or repaired, your California homeowners insurance will pay for your living expenses, including food, increased housing costs, furniture rental, telephone instillation and relocation costs to maintain your normal standard of living.

  
  
  

• Liability - This protects you up to $100,000 when you or another member of your family, including your pet, unintentionally injures someone or damages their property.

  
  
  

• Medical Coverage - Covers medical costs to non-family members injured on your property.

 

What California Homeowners
Insurance Does Not Cover

 

• Water seepage not related to flood.
  
  
• Earthquake - this must be purchased separately at minimum cost.
  
  

 

How To Find Cheap California
Homeowners Insurance Rates

 

Section 112959 of the California Insurance Code requires the California Insurance Commissioner to publish and distribute a comparison of insurance rates each year.  Rates vary greatly from county to county as well as from company to company and can range between $349 and $4880.  However, you will be happy to know the average homeowner's insurance premium is around $835. 

 

There are several things you can do to help lower your CA home insurance rates.

 

• Increase Your Deductible.  If you have a $250 deductible, raising it to $500 can save you some money, raising it to $1000 can save you even more.  Don't raise it to high though. You want to make sure you can cover it.

  
  
  

• Look Into Package Deals.  Some insurance companies will give you a discount if you purchase other insurance, such as your auto insurance, through them. 

  
  
  

• Installing Fire Alarms and smoke detectors can lower your premiums as well as having an indoor sprinkler system.  By the same token, if your household consists of entirely non-smokers ask your agent about discounts.

  
  
  

• Installing Security Systems and dead bolts to prevent break-ins can help lower your costs.

 

California Homeowners Insurance:
Earthquake Coverage

 

Earthquake coverage is handled much differently than your regular homeowner's policy and will add up to an additional $13 to your insurance premium, but covers things much differently than the major policy.  Companies that sell residential types of insurance are required by the California Insurance Code to section 10081 to offer earthquake coverage and the offer must be made in writing, describe the coverage amounts and deductibles along with the policy premium. 

 

After being offered earthquake insurance by your insurance company, by law you have 30 days to respond or the offer is considered rejected.  Insurance companies only have to offer earthquake insurance every other year and they are prohibited by law to cancel, reject or refuse to renew your policy if you accept it.

 

What you need to know about earthquake coverage:

 

• Earthquake insurance covers the cost of replacing your home, your personal property for no less than $5,000 or 10% of the cost of the dwelling and for any additional living expenses of at least $1,500. 

  
  
  

• The maximum deductible that can be charged on earthquake insurance is 15% of the cost of your home.

  
  
  

• Additional structures such as swimming pools and masonry fences are excluded in earthquake coverage.

  
  
  

• Retrofitting your home to withstand earthquakes by such measures as anchoring the house to its foundation with seismic bolting, reinforcing the fireplace and installing automatic gas shut-off valves can help lower your premium. 

  
  
  

• If your home has been retrofitted your insurance company must offer $10,000 for reconstruction costs to bring your home to current building standard codes.

  
  
  

• Earthquakes and/or aftershocks can cause other damage such as the bursting of water pipes, this falls under proximate cause and is not covered under the normal perils of your homeowners insurance. 

 

You must have earthquake coverage for these things to be covered.  Fires caused by earthquakes are the only exception to the proximate cause clause in California homeowners insurance policies.  This is covered under your regular policy.

 

Compare Cheap California Homeowners
Insurance Policies Now!

 

Use our free tool at the top of the page to get started comparing California homeowners insurance policies from top insurance companies side by side.  Get started finding cheap California homeowners insurance now!

Homeowners insurance premiums in California have remained relatively flat the past decade. However, a number of forces have contributed to rising costs and a tighter market for homeowners insurance. Any legislative activity that seeks to improve the condition of California 's homeowners insurance market should focus on those factors that would reduce the costs of insurance rather than impose additional regulation that would add to cost burdens and potentially reduce availability for consumers.

The top five reasons California 's homeowners insurance rates are increasing are:

1. Skyrocketing water damage claims

•  California insurers paid nearly $4 billion for household water damage claims between 1997 and 2003. In 1997, water-related claims paid by insurers representing two-thirds of the market totaled $206 million. By 2003, the amount more than doubled to $428.5 million.*

• In 1997, the average water claim filed in California cost $2,484 to repair. In 2003, the average water claim cost more than doubled to $5,256 per claim.

• The increase in water claims can be attributed to many things. Consider: the average home in California once had only one bathroom, but today homes average two or three. Washing machines used to be located on the first floor or basement, but today many are located on the second or third floor. Standard carpet and linoleum have been replaced with more costly hardwood and tile options.

2. Mold claims and litigation costs

• Mold claims and litigation costs skyrocketed in California from 2000-2002. Fueled in large part by the experience in Texas where a consumer won a $32 million court judgment involving her insurer's handling of a mold claim. The verdict was later reduced, after appeal, to $4 million, but its negative impact had been felt. Since then, insurers have been hit with thousands of "toxic mold" lawsuits, but today in California , that has been mitigated by recent legislative action.

3. Increased home values in California

• The rapid increase in home values over the past five years has contributed greatly to the increased costs for homeowners insurance. According to the California Association of REALTORS®, California's average home is valued at $323,000, and in many regions the average home value exceeds $450,000.

4. Escalating home repair costs

• Along with escalating home values, the cost of repairing a home has also increased. The average home repair cost in California has increased by 25 percent over the past five years.

5. Increased fraud

• According to the National Insurance Crime Bureau, insurance fraud costs Americans more than $45 billion a year.

• Every California household spends an extra $300 per year in insurance premiums to pay for fraud.

California Insurance Information

In order to make informed choices when you buy any type of insurance in California, it is key to have at your disposal as much accurate insurance information as possible. A person who thoroughly researches the policies and quotes of insurance companies in California will be able to choose the policy that is suited for his or her situation. One outside source that can find you lower California Insurance Rates contains dozens of helpful hints that can save you a lot of money. Our mission is to provide the insurance shopper with information about car insurance and homeowner's insurance in California.

THE TOP TEN MOST EXPENSIVE AND LEAST EXPENSIVE
STATES FOR HOMEOWNERS INSURANCE, 2005
 

Rank	Most expensive states	Homeowners average premium (1)	Rank	Least expensive states	Homeowners average premium  (1)
1	Texas (2)	$1,372	1	Idaho	$457
2	Louisiana	1,144	2	Utah	477
3	Florida	1,083	3	Oregon	491
4	Oklahoma	996	4	Wisconsin	495
5	D.C.	963	5	Delaware	498
6	Mississippi	939	6	Ohio	531
7	California (3)	895	7	Maine	553
8	Rhode Island	849	8	Washington	589
9	Alabama	847	9	Iowa	594
10	New York	842	10	New Mexico	605
(1) Based on the HO-3 homeowner package policy for owner-occupied dwellings, 1 to 4 family units. Provides "all risks" coverage (except those specifically excluded in the policy) on buildings and broad named-peril coverage on personal property, and is the most common package written. (2) The Texas Department of Insurance developed home insurance policy forms that are similar but not identical to the standard forms. (3) California data were provided by the California Department of Insurance.

Earthquake insurance is an essential purchase for condo associations because board members have a fiduciary duty to act in the best interests of the Association and its membership as a whole. That means that the board has to consider the needs of ALL owners rather than the desires or personal agendas of one or more individuals.

Let's say your building or complex is substantially damaged from a 7.1 magnitude quake. Chances are every unit owner will face repair and replacement costs running into the six figures, for their share (pro rata) of the special assessment.

The question you need to ask is:

Will all owners in your association be able to write a check for $100,000? Will some owners, lacking the financial resources needed, or be forced to walk away from their properties?

IF THERE IS ANY DOUBT THAT EVEN A SMALL MINORITY OF OWNERS WILL BE UNABLE TO COME UP WITH THE MONEY TO PAY THE EMERGENCY ASSESSMENT, IT IS NECESSARY FOR THE ASSOCIATION TO PURCHASE COVERAGE TO PROTECT THESE OWNER'S INTERESTS.

HERE'S WHY:

The Association's Board could very likely be sued by those owners that cannot pay the assessment, for failure to act in the Association's best interest. D&O contracts typically exclude coverage for this type of lawsuit, so the board is going to need to pay for their own defense. If the Board loses, not only will they be out thousands in legal fees, but also quite possibly hundreds of thousands more for payments of the earthquake damage assessments for the plaintiffs as ordered by a judge. This risk in entirely unnecessary and can easily be by avoided by getting adequate Earthquake coverage in place for your Association.

Argument # 1: The Deductibles Are So High That the Policy Will Never Pay Anyway

There are those that will say that even if the association buys earthquake insurance these people will still not be able to pay their portion of a deductible so why bother purchasing the coverage at all. However, the numbers tell a different story.

Let's look at the numbers for condo of average size and construction. For the sake of example we'll use a property with units of 1,500 sq ft.

The first thing you need to consider is the cost to rebuild. Construction costs for a typical condo unit run between $90 and $150 per foot depending on the associations CC&Rs. (If the association is bare walls it will be about $90 and if it is full coverage of interiors it will be around the $150 rate.)

Since our example is 1,500 square feet, the cost of construction for the association would run somewhere between $135,000 and $225,000 per unit. If the association has a 15% deductible the owner will be responsible for between $20,250 and 33,750. The owner's loss will be stopped at this point and the insurance the association purchased will kick in to pay the balance of the loss. Here is what is unique about condo associations. Unlike a single family residence a condo owner has the ability to purchase loss assessment coverage personally from the CEA to cover his potential assessment to cover the deductible. This coverage provides up to $50,000 in protection and will lower the exposure to just $7,500. Most anyone will be able to come up with $7,500 in order to protect his/her $500,000 asset.

Argument # 2: Odds Are Low That a Quake Would Strike & Damage MY Building

To those who say it will never happen, I say don't be so sure. In a new comprehensive study, scientists have determined that the chance of having on or more magnitude 6.7 or larger earthquakes in California over the next 30 years is greater than 99%. In 1989 we experienced a 6.9 in Loma Prieta and in 1994 the Northridge Earthquake was a 6.7. The truth is earthquakes are unpredictable and can happen anywhere at any time Just ask the people in China that just experienced a 7.2 earthquake how much damage can be done in a matter of seconds. The aftershocks of that quake were larger than what was felt during the initial shock in the Northridge quake. We all hope never to experience such a devastating event, but there is always a possibility of it happening and it's better to be prepared than to say I wish I would have. . .

Argument # 2: MY Building Survived Northridge with No Damage, So Why Worry Now

If your building was sitting atop the epicenter in Northridge and came through entirely unscathed I would probably agree. Now if your anywhere else in Los Angeles County your building did not get the full brunt of the power of the earthquake, and you have no idea how well your building will fare if you are at epicenter of 6.7 magnitude quake. Now close your eyes for second, even if you were the undamaged building in Northridge, if the Northridge earthquake was 5 times its magnitude (that was the strength of the quake in China) do you think your building would have fared just as well?

If ALL of your Association's Owners are willing and able to write a check for $100,000 or more on top of their mortgage, or if ALL of the Association's Owners are willing and able to walk away from their units, along with the adverse affect it will have both financially and physically, you do not need Earthquake Insurance. Short of all that your Association needs Earthquake Insurance. Even in cases where there is only a minority of owners that want or need the coverage, they have no ability to protect themselves on their own. Therefore, the Board has a fiduciary responsibility to protect those people and their interests.

Unlike fire and liability insurance, there is little you, the insured, can do to change the rating factors that generate earthquake premiums. But thankfully, there are a few things that can be done on your behalf to make sure you are not overcharged.

Premiums are driven in large part by how your insurance company calculates the probable maximum loss of your property. Several factors go into this calculation and believe it or not, even the smallest oversights or misconceptions can cost you big money in your premium.

Factors that make up the premium determination for any property are:

• Location
• Year Built
• Type of Construction
• Type of Parking
• Insurable Value

• Number of Stories

 

Location

Where the building is located will make a major difference for two different reasons:

First: what is the makeup of the soil underneath the building? Is the building built on top of bedrock or landfill? Is it on top of a fault line or many miles away from one? Commercial earthquake companies have spent millions on programs that have mapped out every square foot of California. The less firm the land underneath your building the higher the probable maximum loss and the more an insurer will charge to insure your property. Likewise, the closer you are to a fault line the more the insurer is going to charge as well. Two similar buildings one built on top of landfill that has a fault running right through it will pay far more than a property built on top of solid rock and the fault line is 10 miles away.

Second: What is the amount of exposure the insurance company has in proximity to your property? The more exposure that a company has on the books in your area the less it wants to insure one more building in your area. A company will charge more in the areas where they have less capacity. This is not due to conspiracy but rather the basic rule of supply and demand at work. This explains why rates go up after a major catastrophe. As the insurance companies pay out large claims they now have less capacity to write policies so supply shrinks and demand stays the same so the price goes up. Similarly, as the insurance companies rebuild their reserves they expand the amount they are willing to write and prices start to drop again.

This is where access to all of the markets, even obscure ones, will make a big difference to you. We have access to every earthquake market including a couple of very obscure programs that are able to write when others are declining. If your broker is not actively shopping your policy every renewal you may end up severely overpaying for no good reason, because all that needed to happen was for you to be rewritten from one company to another. The reason that things change every year is due to supply and demand. Your current company may have written too much business in your area and thus decides to keep their prices higher than another carrier that year due to decreased capacity.

Year Built
The year built will reflect what building codes the building was built to. If a building in California was built prior to 1976, it is assumed to be missing many seismic safety features that buildings built today have in order to comply with code.

If you have a pre-1976 building, obtaining proof that your building has been retrofitted to meet 1976 or newer building codes will make a big difference. We know which carriers will grant exceptions which companies will grant exceptions based on the proof. If your current agent hasn't asked for the paper work and you have it, you are most likely being overcharged for your coverage.

Type of Construction
This refers to the type of materials that were used to build your buildings. Was it wood frame concrete tilt up, brick? Each carries different rates and risk factors. Make sure you really know the type of materials that were used to build your building. I have seen insureds say their buildings were made of brick, when in reality it was a wood frame building with a brick façade. Wood frame costs a fraction of the cost of brick. So long as you have gotten this right there is nothing you or your agent can do to really affect this factor.

Type of Parking

The type of parking also affects your rates. For purposes of earthquake insurance parking means under building parking.

Parking falls into three categories:

1. Subterranean/subterranean style
This is your typical parking garage that has concrete retaining walls holding up the upper floors. This is what you will normally find on most post 1976 multi-story office/apartment and condo complexes.

2. Soft Story Tuck Under
This is typically a two or three story building that is built over parking. Most are carports that line one or two sides of a building and the space above the carports are held up by a few two by fours. This type of construction ceased in 1976 due to the very high likelihood of severe damage during an earthquake. This type of construction is represented by the notorious Northridge Meadows complex that was a total loss and several lives were lost because the construction completely failed during the earthquake. This is the least desirable of all types of construction and it is very difficult to find coverage but it is still possible. Much of this exposure can be avoided by doing building retrofits. If your building has been retrofitted then that information can drastically reduce your earthquake insurance costs.

3. Living Space Over a Garage
This is your typical town home complex. Each unit has its own two car garage. This is different from soft Story tuck under, because there is normally sheer walling along the sides of the building and the parking is reinforced with this extra strength.

Number of Stories

The more stories there are to a building the more risky a building is. A sinlge story 30,000 square foot building is less risky than a four story 30,000 square foot building. There is nothing you can do about this rating factor.

Value of the Building

Getting the value right is critical to your getting the most value for your insurance dollars. This affects the amount of coverage you have the deductible and the premium.

Your deductible is affected because if the premium is overstated your deductible has just been artificially inflated. The reason for this is that earthquake deductibles are based on a percentage of your total insurable value.
Your coverage is affected potentially two different ways:

1. If it is overinsured you have just purchased coverage you won't use. Furthermore, the deductible that you are have to pay on will also be artificially inflated so you will be paying more out of pocket before the earthquake coverage begins paying.

2. If you have underinsured the building you may have just triggered an actual cash value clause in your earthquake coverage, and you may not have enough coverage to rebuild your complex. Actual cash value means that the insurance company will pay you based on the depreciated value of the complex instead of on the basis of what it actually costs to rebuild the building.

The premium is based on the amount of homeowners insurance coverage that you have purchased. So, the more coverage that you purchase the more costly the coverage will be, but this is not an arithmetic growth. The cost per thousand of coverage goes up significantly when values go over a particular threshold depending on the other factors that are involved with the building.

Allow me to walk you through an example so you to may easily understand what we are talking about.

A complex of 5 units has a real replacement cost of $1,000,000. It is insured for 1,200,000 by the broker.

Now watch what happens;
If the policy has a 15% deductible you have just increased your deductible from $150,000 to $180,000. The premium has just gone up from let's say $6,000 to $7,500. Now here is the worst part. If it actually only cost a million dollars to rebuild your complex they will now pay the million dollars minus $180,000 so that the amount the insurance company will actually pay you will drop from $850,000 to $820,000.

In most cases a properly done Marshall and Swift replacement cost worksheet that reflects all of the features of your building will avoid most of these issues. That is why we prepare a replacement cost worksheet for every one of our clients and prospects so that we know you are always properly insured.

Now let's look at a condo association where the broker doesn't bother to read the CC&Rs or reads them incorrectly. This can create all by itself and over valuing of the complex by as much as 40%. So now, using the previous example you have just created a situation where instead of a $1,000,000 in coverage you now have $1,400,000 in coverage. The deductible has gone from $150,000 to $210,000. The premium will now be inflated from $6,000 to almost $9,000. Even worse yet, the $400,000 of additional coverage is completely worthless because you don't even have the right to insure the interiors as an association. You have just been overcharged.

On the flip side, the association could end up failing to insure the interiors even though they had a responsibility to do so do. Do you want to be the one that informs the owners there will be a second special assessment of $40 per foot to cover the fact that the board didn't purchase the correct coverage?

As experts in earthquake insurance and association insurance, we are experts at getting building values right the first time. We have read thousands of association CC&Rs and we understand them from an insurance prospective. With over 173 associations currently insured with our agency we know and understand your needs. As you can see there are several different ways that a broker can end up accidentally costing you big money, either through wrong coverage or not understanding your real needs.

Don't trust your most valuable possessions to a broker that doesn't specialize in this type of insurance. Don't wait until it is too late. We are happy to provide you with a free risk review and analysis so that you can see if the coverage that you have is optimal for your needs. All it takes is one five to 10 minutes of your time.

Learn more about the new condo insurance law in Florida