Landlords find insurance hard to come by nowadays.

Many rental housing providers have been left in the lurch when insurance carriers have refused to write new policies or renew policies in a state that is perpetually facing some sort of natural disaster. State Farm, Allstate, and Farmers have all given a cold shoulder to homeowners after severe weather events and rising costs for the labor and materials it costs to rebuild ravaged properties. Other companies have ceased or plan to cease new insurance policies in the Golden State.

Aside from severe weather, regulators put into place an automobile insurance rate moratorium and refused to process rate filings from March 2020 to October 2022, an entire 31 months. Insurers have viewed California's ratemaking process as hostile and weaponized, causing them to limit their exposure here.

From CNN: Another major insurance company limits new homeowners insurance in California ›

Governor Gavin Newsom and Insurance Commissioner Ricardo Lara have pledged to fix a failing insurance market by allowing insurers to evaluate climate risks when setting rates. California has stood alone by prohibiting the use of forward-looking climate models to project future losses. The state instead requires wildfire risk to be priced taking into account an insurer's average wildfire losses over the last 20 years.

Viewpoint: California needs regulatory reform and quick rate review to halt a personal lines meltdown ›

There is no easy solution and so our landlording community will continue to operate in a difficult time. To gauge the extent of the problem, we turned to our go-to insurance guy, Jude Winterhalter.

It's a question of whom you believe. The carriers say that reinsurance costs, along with operating and claims costs, are higher than ever, and let's put an asterisk on reinsurance costs - carriers are saying that they are paying 3 or 4 more times more for reinsurance than they did a few years ago.

At the same time, reinsurers say that climate losses are causing their rates to go up, which they are passing on to the carriers. Keep in mind that reinsurers are not subject to the Department of Insurance pricing mechanisms. They are not required to follow the same state regulations as admitted carriers.

Consumer groups do not believe the carriers and are putting pressure on the DOI to not give in.

Supply has contracted. I have never seen carriers flee California in such numbers. Consumers and businesses - like those with rental properties - are saddled with higher prices because the carriers that are left, by and large, are non-admitted and are not subject to DOI. The carriers that lingered behind stay because the DOI has given them the latitude to raise rates.


Life is increasingly difficult for housing providers, but Bornstein Law is dedicated to helping you power through your challenges.

Make no mistake that these are difficult times for our landlording community, but it is made easier if surrounded by professionals who have your bottom line in mind. For informed advice, reach out to our office.