Home insurance rates are about to increase dramatically for hundreds of thousands of California policyholders. State insurance regulators recently approved rate increases for two of USAA’s largest subsidiaries. USAA is the sixth-largest home insurer in California.
Rates will increase for home and condo policyholders
The California Department of Insurance approved USAA’s request for a 16% increase to homeowners policy rates and a 31% increase to condo owners insurance policies. Those rate increases should begin to appear in February, according to the filing.
The department also approved a request from its subsidiary, USAA Casualty Insurance Company, for rate increases of 25% and 40% for homeowners and condo owners insurance policies, respectively. Those new rates will appear in customers’ December renewal notices.
About 5.61% of Californians get their coverage from USAA or one of its subsidiaries. The rate increases will affect more than 234,000 home insurance policyholders and 31,000 condo policyholders.
Addressing ‘rate inadequacy’ and wildfire risk
While USAA serves a sizable portion of the California market, its growth has stagnated in recent years because of concerns surrounding the financial feasibility of expansion. USAA Casualty Insurance Company ceased writing new policies in California in April 2023 due to concerns surrounding “rate inadequacy,” according to its filing.
USAA also noted it’s still writing new policies but won’t write coverage for homes with a wildfire risk score greater than 1 (on its 32-point scale, with 32 having the highest risk).
USAA hasn’t said if it will increase the amount of business it does in California after receiving approval for these rate increases.
What’s Next? Reversing a continuing trend
USAA’s upcoming rate increases are just the latest development in a turbulent California insurance market.
In August, the CDI approved a 34% rate increase for Allstate home insurance policies, affecting 354,034 policyholders. Residents in Valyermo and other select areas saw their rates climb by $5,000 or more with that rate adjustment.
They’re not alone.
Rates across the state climbed 8% between 2023 and 2024, with the median home insurance rate now $1,921 per year, according to Insurify data.
The increases in home insurance rates aren’t exclusive to California either. Home insurance rates in Louisiana have climbed 23% this year, and Illinois, North Carolina, South Carolina, Montana, Utah, Michigan, and Maine have all seen double-digit rate increases in 2024.
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