California finalized its plan to ease home insurance crisis. Here’s what it means for rates

Starting in 2025, insurance companies in California will be allowed to pass on some of the costs of reinsurance to consumers, according to a new regulation from the California Department of Insurance. Reinsurance, which acts as a financial safety net for insurers in the event of catastrophic losses, has traditionally been an expense borne entirely by insurance companies. However, this reform marks a significant shift in how those costs are managed.

The change is part of Insurance Commissioner Ricardo Lara’s Sustainable Insurance Strategy, aimed at addressing California’s ongoing insurance crisis. While consumer advocates warn that this could lead to higher premiums—potentially increasing by 30%-40%, according to the Consumer Federation of America—regulators have imposed limits to prevent excessive cost transfers. Additionally, insurance companies that pass on reinsurance costs must commit to maintaining or expanding their presence in wildfire-prone areas, ensuring continued access to coverage in high-risk regions.

As climate change continues to drive natural disasters, the rising costs of reinsurance have strained insurers, with some citing it as a reason for leaving California altogether. By allowing these costs to be partially shared with consumers, the new regulation seeks to stabilize the insurance market while addressing the challenges posed by a changing climate.

So Hard is it to get Insurance in the Bay Area?

This is probably one of the Most asked questions from my clients right now. However getting home insurance may be easier than you think. While wildfire risks and other natural disasters have caused some insurers to tighten their policies, many companies are still actively providing coverage in the region.

With the right approach, protecting your home can be both straightforward and affordable. I personally work with Insurance brokers who can tailor to your specific needs and find policies that fit your budget.

If you have any questions at all, or need guidance, don't hesitate to reach out.

-Ashley Boteler -