Why Insurance Is Getting Harder in California — And What Homeowners Need to Know

If you own a home in California or are thinking about buying one, you’ve probably heard that getting home insurance is becoming a big challenge. Rates are going up. Coverage options are going down. And many people are being forced into a plan they never expected to use: the California FAIR Plan.

In a recent episode of the Opposites Unite podcast, we talked with Henry Rodriguez, a California insurance expert with over a decade of experience. Henry explained why the insurance system in California is under stress, how it affects buying and selling homes, and what you can do to protect your biggest asset—your home and your family.

Let’s break it down in simple terms.

What Is the California FAIR Plan?

The California FAIR Plan is supposed to be a backup plan for homeowners who can’t find insurance anywhere else. But now, it’s becoming the main plan for more and more people.

Why? Because big insurance companies are pulling out of California. With all the wildfires, rising repair costs, and tough rules from the state, many insurers say it’s too risky to do business here.

So, if you get dropped by your insurance company or can’t get coverage when you buy a home, the FAIR Plan may be your only option. But here’s the thing: it’s limited. It doesn’t cover everything a regular homeowners policy would, and you often have to buy extra insurance on top of it to fully protect your home.

Why Are Insurance Companies Leaving California?

It comes down to something called Proposition 103. This law was passed in the 1980s to protect consumers by requiring the state to approve any rate changes by insurance companies. Sounds good, right?

Well, here’s the problem: times have changed, and so have the costs.

Wildfires have gotten worse. Construction costs have skyrocketed. And inflation is making everything more expensive. But insurance companies can’t raise their prices fast enough to keep up. Because of Prop 103, any rate increases have to go through a long approval process with the state.

As Henry Rodriguez explained on our podcast, this makes it hard for insurance companies to stay in business here. Instead of waiting months or even years for approval, many companies are just leaving California altogether.

That’s why fewer companies are writing policies. That’s why it’s getting harder to find coverage. And that’s why rates are jumping.

How Does This Affect Homeowners?

If you’re already a homeowner, your insurance costs are likely going up—and fast. You may also get a non-renewal notice, meaning your insurance company has decided not to offer you a new policy when your current one ends.

If you’re trying to buy a home, this could delay your closing or even kill the deal. Lenders require insurance before they’ll fund your mortgage. And if you can’t get insurance, you can’t close.

This is becoming a real estate issue, not just an insurance one. Sellers are losing buyers. Buyers are losing homes. It’s making the California housing market even tougher than it already is.

What About Wildfires?

Wildfires are one of the main reasons insurance is such a big issue in California. Areas that didn’t use to be high-risk now are. Insurance companies use something called “fireline scoring” to rate how risky a property is, and even if your home hasn’t burned, you could still be flagged as too risky.

Henry told us that even homes with defensible space and upgraded roofing can get denied just because of their location. It’s not always fair, but it’s the reality we’re in.

What You Can Do:

• Ask your insurance agent about fire-resistant upgrades.

• Consider getting a second opinion from a broker who works with multiple carriers.

• Look into private insurance plus a FAIR Plan add-on if needed.

Why Life Insurance Matters Too

Insurance isn’t just about your house. It’s also about you.

Henry brought up something really important on the show: life insurance. If you’re the main breadwinner or part of a dual-income household, what happens if something happens to you? Would your family still be able to afford the mortgage? The bills? The future?

Life insurance is often overlooked, but it’s one of the best ways to protect your family’s financial future. It can pay off debts, cover living expenses, or even help your spouse stay in the home you’ve worked so hard for.

Think of it this way: your home is your biggest investment, but your income is what makes it possible. Protect both.

What Needs to Change in California?

Henry believes that the state needs to take a serious look at reforming Prop 103 and allowing insurance companies to adjust rates more easily. Otherwise, we’ll keep losing carriers, and homeowners will keep struggling.

He also mentioned that while insurance should be regulated to protect consumers, it also needs to be realistic. The cost of rebuilding homes has gone up. The risk has gone up. So the pricing has to match.

Until something changes at the legislative level, California homeowners need to be extra proactive when it comes to protecting their homes.

5 Tips for California Homeowners

If you live in California, here are five simple steps to stay ahead of the insurance crisis:

• Review your policy every year – Make sure your coverage still fits your home’s value and risk level.

• Talk to a licensed insurance agent – Don’t wait until you get dropped. Ask questions now.

• Don’t assume you're fully covered – Especially if you're on the FAIR Plan, check if you need extra coverage.

• Ask about life insurance – It’s just as important as home insurance for protecting your family.

• Stay informed – Watch for changes to state insurance laws and speak out if they affect you.

Final Thoughts: Be Proactive, Not Reactive

The California insurance crisis isn’t going away anytime soon. But by staying informed, working with professionals, and planning ahead, you can protect your home and your loved ones.

If you're buying, selling, or just trying to make sense of your insurance options, connect with an expert. And if you haven’t already, go listen to our full episode with Henry Rodriguez on the Opposites Unite podcast. It’s packed with helpful advice for homeowners at any stage.