California homeowners will soon see higher insurance costs as state regulators have approved rate increases for two major insurers—Mercury General and Safeco.
Rate Increases Set for March and May
Starting in late March, Mercury General, the state’s fifth-largest home insurer, will implement an average 12% rate increase for policyholders, affecting about 579,300 customers.
Safeco, a subsidiary of Liberty Mutual, will follow suit in May, raising rates by an average of 7.2% for approximately 86,700 policyholders. However, this increase will not apply to condo owners or renters, as Liberty Mutual previously announced plans to exit those markets by 2026.
For customers with policies from either company, the higher rates will take effect upon renewal after the official implementation date.
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Ongoing Challenges in California’s Insurance Market
Both insurers submitted their rate hike requests in June 2023, well before recent devastating wildfires hit Southern California. Insurers across the state, including the California FAIR Plan, have faced mounting costs due to wildfire-related claims. As of February 5, the California Department of Insurance reported that insurers have paid out $6.9 billion in wildfire-related claims.
The FAIR Plan, California’s last-resort insurance option for homeowners unable to secure private coverage, continues to see increased demand as private insurers reduce their presence in the state.
With insurance costs rising and more companies reconsidering their role in the California market, homeowners may need to explore alternative coverage options or brace for continued financial strain.
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