California home insurance costs surge 84%, reducing what buyers can afford

Even the FAIR Plan has felt the pressure of rising costs.

For people hoping to buy in wildfire-prone areas such as Santa Clarita, California, insurance alone can make a seemingly affordable home unaffordable.

Key points

According to Stanford University, average homeowners insurance premiums in California rose 84% between late 2020 and March 2026. That increase has added another layer of strain for would-be buyers already dealing with high housing costs.

The Stanford white paper also reported that average deductibles climbed from $1,813 to $2,553 over the same period. In practical terms, that means homeowners may face even higher out-of-pocket costs if they need to file a claim.

California’s insurer of last resort, the FAIR Plan, covers about 5% of the state’s single-family homes and backs roughly 6% of newly issued mortgages, according to KHTS. Its limited policy covers fire, smoke, lightning, and explosions inside the home.

Even so, the FAIR Plan has not been spared from price increases. Beginning in mid-October, rates rose by an average of 29.1%, and some high-risk homeowners could see wildfire premiums double, according to KQED. Nearly half of FAIR Plan policyholders also buy supplemental coverage, which increases total costs.

As household bills continue to rise, solar power remains one way to cut energy expenses. Palmetto is offering Southern California residents a promotion that claims average electric bill savings of 40% with no money down.

More context

KHTS noted that an extra $2,000 a year in insurance costs works out to about $167 a month. For families on tight budgets, that money has to come from somewhere.

The challenge is compounded by lender requirements. According to KHTS, mortgage lenders need proof of homeowners insurance before they release loan money. If buyers discover late in the process that coverage will cost more than expected, the sale can be delayed or even fall through.

In Santa Clarita, the Santa Ana winds and neighborhoods near open land make fire protection a major factor when assessing a home.

What buyers can do

Buyers can begin by checking fire risk through the Office of the State Fire Marshal’s fire hazard viewer. Its address-based maps consider terrain, vegetation, and fire weather, though they do not account for fire-resistant upgrades made to an individual home.

Before making an offer, buyers can also ask an insurance broker for quotes using the property’s address, construction year, and roof type. It may also help to ask about discounts for ember-resistant vents, Class A roofing, or cleared vegetation, according to KHTS.

Buyers should also allow enough time in the closing schedule to secure a binding insurance quote before the sale is finalized.

For homeowners trying to reduce monthly expenses, Palmetto says its Southern California solar program can help the average resident save 40% on electric bills, potentially amounting to thousands of dollars a year. The $0-down option also removes a major upfront barrier.

Related coverage

Santa Clarita homeowners are not alone in facing higher premiums and fewer coverage options.

California’s FAIR Plan raised rates by 29%, leaving mountain residents worried about bigger bills.

In California’s Inland Empire, even newly built homes faced coverage gaps during the insurance crunch.

A California homebuyer was hit with a $25,000 fire deductible after turning to an unfamiliar insurer.