This California city has one of nation's worst home insurance trajectories, report finds

San Francisco Chronicle​

20-06-2025

The cost of home insurance is rising at a much faster pace than the income of homeowners themselves, especially in Sacramento, according to new research from Zillow.
Since 2019, insurance premiums across the United States have risen by an estimated 38% while homeowner income has risen just 22%, the research found. The top five metro areas with the highest premium growth were all located in hurricane-prone Florida with just one exception: Sacramento.
The Census-designated Sacramento metro area stretches all the way east to Lake Tahoe, encompassing a large swath of Sierra Nevada foothill communities with high fire risk. Zillow's climate risk data, supplied by the First Street Foundation, suggests 46% of homes in the area are at major risk of wildfire.
As a result, many insurers have stopped writing policies in the region as a whole, or are only offering them at a high price, according to Irene Sabourin, an independent broker based in Citrus Heights (Sacramento County). She said premiums have generally risen around 10% to 20% over the past year.
The increased costs hit even before homeowners pay their first premium bill, Sabourin said. Many of her clients living in older homes can only secure coverage after going through costly upgrades to their electrical wiring, plumbing or roofs.
If they can't, they'll likely end up on the California FAIR Plan, the state's insurer of last resort. That's been the path of many homeowners living in the foothills, such as Auburn and Placerville, Sabourin said.
From September 2023 to September 2024, the number of Sacramento County residences and businesses insured by the FAIR Plan more than doubled from 464 to 1,124. In adjacent Placer County, there are 15,674 FAIR Plan policies — up 28% from last year. The FAIR Plan is often expensive and requires customers to seek out and pay for a second policy if they want protection against water damage, liability payments and other key types of coverage besides fire.
In the analysis of 50 major metro areas, just two bucked the trend: Boston and Hartford, Conn., where insurance premiums have only risen modestly and have been outpaced by the rise in homeowner income.
Premiums generally remain much higher in states like Florida and Louisiana than in California, even as California's rates climb. The report estimates the typical premium in Sacramento has risen $648 since 2019, while in Miami that figure is $1,478. As of 2022, the latest data available from the National Association of Insurance Commissioners, the average annual home insurance premium in California was $1,492 compared to $2,677 in Florida.
Zillow's analysis relies on homeowners' self-reported insurance premiums from the American Community Survey from 2019 to 2023, according to senior economist Kara Ng. To extend the forecast to 2024 and 2025, Ng used the Bureau of Labor Statistics' price index for home insurance premiums, which is updated monthly.
Generally, homeowners have higher incomes than renters and may be able to better weather the rise in costs, Ng said. But the data presents concerns that rising insurance prices could be driving away would-be first-time-homebuyers.
In already-expensive California metro areas like San Francisco and Los Angeles, the data shows an increase in insurance costs would have a small impact on the number of listings Zillow defines as affordable for households with median incomes — ones where the monthly mortgage payments plus other recurring expenses like insurance would not exceed 30% of the median income.
'For places where houses are very unaffordable to begin with, just adding a little bit more unaffordability to the picture doesn't change the fact that it's still unaffordable,' Ng said. 'For cities where you actually have a fighting chance, or closer to a fighting chance, adding additional burden would lower the amount of listings you would have.'
In Sacramento, the data shows the number of listings Zillow considers affordable would drop by 6.6% if insurance premiums rise another 20%. Even if prices rise just 5%, the number of affordable listings would decrease by 3%. The San Diego metro area could also lose up to 5.2% of affordable listings if premiums rise by 30%.
Sabourin said homebuyers should contact an insurance agent to get a quote before they put an offer in on a house. Those that don't are often shocked by the price of insurance in Sacramento, she said.
Though the situation has improved marginally over the last few months, Sabourin said the pain may ease only when more carriers arrive, delivering competition.
'Until we get more markets in place, the general idea is that most people have to factor in a 25% rate increase,' Sabourin said.