Travelers Insurance, one of California's largest home and auto insurers, will raise its rates by an average of 15%, the latest in a series of rate increases and policy limitations that major insurers say are caused by risks of forest fires, reinsurance costs and inflation. .
Given the go-ahead by the California Department of Insurance this week, Travelers will update its rates for more than 320,000 owners starting June 24. It's not immediately clear which areas of the state will see higher rates.
Michael Soller, deputy commissioner of communications for the state Department of Insurance, said the dearth of information is “frustrating across the board.”
The department, he said, is doing everything it can to ensure that consumers do not pay more than required. Traveler premium increases, she said, are completely legal under Proposition 103, the 1988 ballot measure that regulated property and casualty insurance prices.
The average cost of homeowners insurance in the state is $1,250 per year, or about $104 per month. That's less than the national average of $1,915, according to Nerdwallet. The average cost for a homeowner in the city of Los Angeles is $1,485 a year, or about $124 a month.
Travelers is the latest major insurer to raise rates, limit the number of new policies issued or withdraw from the California market entirely, all actions that are testing the market.
In April, Tokio Marine America Insurance Co. and Trans Pacific Insurance Co. notified the insurance department that they will not renew 12,556 homeowners policies with a premium value of $11.3 million. starting July 1.
State Farm, Farmers and Allstate have limited their offers in California cutting back on new policies issued or tightening underwriting standards. State Farm, for example, announced in March that it would not renew 72,000 policies. Allstate, however, has stated that once the industry-favored insurance reforms proposed by Insurance Commissioner Ricardo Lara go into effect, it will begin writing new homeowners insurance policies in the state, Soller said.
Last year, Geico eliminated all of its in-person offices in the state and offers policies only through the company's website or app.
To make insurance rates “more predictable and insurance more available” in the state, Soller said the department continues to make progress in updating its regulations.
That update could allow insurers to use algorithms to predict the future risk properties face from wildfires. Lara proposes allowing insurers to use catastrophe models when pricing policies. Currently, premiums are based on an insurance company's past losses. This is one of several proposals Lara advanced in a Sustainable Insurance Strategy announced last year.
Although insurers are making significant changes to their coverage offerings, many are still issuing new policies in California. Here is a partial list:
Farmers Insurance Group offers limited homeowners insurance policies in California, with a monthly limit of 7,000 new commercial policies.
Mercury Not only is it offering new policies and renewing existing ones, but it is also accepting clients from Tokio Marina America and its subsidiary, Trans Pacific Insurance Co., both agencies that have withdrawn from the California market.
Chubb and its subsidiaries, including Federal Insurance Co., Vigilant Insurance Co. and Pacific Indemnity Co., offer and renew homeowners policies, but with two limitations. He It stopped writing high-value homes at higher wildfire risk and is not renovating some high-value homes.
USA offers new policies if homes meet its underwriting criteria, which limits the insurer to low-risk properties.
Other insurers continuing to renew or issue new policies in the state include Auto Club of Southern California, Liberty Mutual and American Family.
When a current or potential homeowner has trouble finding a policy in their area, the last resort is the California FAIR Plan Association. A program established by the state Funded by insurers operating in California, their mission is to provide homeowners with an affordable policy option when the traditional market fails them.
To find out which insurers offer policies in your area, the California Department of Insurance has a “Home Insurance Finder” tool that will help you locate a provider within 5 to 75 miles of your property.
