California pays 17% cheaper home insurance, but...

Report sheds light on why insurance in the state is only deceptively affordable

California pays 17% cheaper home insurance, but...

Insurance News

By Lyle Adriano

Homeowners in California may be paying some of the lowest home insurance rates when compared to the rest of America, but a new guide published by insurance quote comparison site reveals that there are a lot of strings attached to such deals.

According to, the average monthly premiums in California are $84 – lower than the national average of $101. Other California-specific findings of the insurance comparison site include:

  • State population – 39,512,223
  • Median Home Price – $492,080
  • Homeownership Percentage – 54.80%
  • Biggest Home Insurance Company – State Farm
  • Average Annual Rate $1,008
  • Direct Premiums Written Annually – $8,365,295
  • Homeowners Insurance Incurred Losses – $56,835,067

The low cost of home insurance in California relative to the US average may seem shocking considering the state’s infamously high cost of housing, but there are several factors involved, noted – and these factors also affect overall insurance pricing in ways that are not immediately apparent.

Although a more expensive home presents more risk to an insurer, the value of buildings in California is comparable to national property values, said It was also mentioned that property values in California drive home prices. It was explained by the report that home insurance providers do not cover the value of the land, instead covering the value of the home. This, explains, means the insurer’s risk does not fully reflect the purchase price of a property. noted that the second factor why home insurance in California appears misleadingly small is that homeowners in the state face risks not covered by standard home insurance. They may be paying less for traditional insurance but are forced to purchase separate add-ons for coverage against earthquakes and floods.

"The benefit of slightly lower home insurance rates for California residents helps offset the extra cost of earthquake insurance and any additional necessary coverage,” said home insurance expert Melanie Musson of

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