Thinking of Dropping Homeowners Insurance? Here’s What You Need to Consider

Owning a home is a dream come true for many Californians, but when it comes to homeowners insurance, that dream can quickly become complicated and even risky. 

With only 31% of Californians currently holding a homeowners policy (one of the lowest rates in the nation according to YouGov), thousands of families are vulnerable to financial hardship if disaster strikes. 

Let’s unpack what’s happening in California’s homeowners insurance market, what a typical policy does and doesn’t cover, and how to make sure you’re protected.

The California Insurance Puzzle

California leads the country in non-renewed homeowners policies. Between 2020 and 2023, over 257,000 residential policies were non-renewed statewide, including 56,558 in Los Angeles County alone. This is a reminder that coverage here is uncertain, and more homeowners have turned to the state’s FAIR Plan for last-resort coverage. 

The FAIR Plan uptake helped offset about 60% of these non-renewals, but many homeowners remain underinsured or completely uninsured.

The reasons for this are complex, from increasing wildfire risks to the exodus of major insurers and the slow process of regulatory change. While the California Department of Insurance has recently allowed catastrophe models and reinsurance costs to be considered in rate filings, these changes will take time to stabilize the market.

Cutting Costs Could Cost You More

With prices rising and some policies harder to secure, it’s understandable that many homeowners are questioning whether to carry insurance at all. But it’s important to weigh the costs against the potential financial consequences of being uninsured or underinsured.

Homeowners insurance doesn’t just protect your property, it protects your family’s financial future. Imagine if a sudden windstorm caused a tree to fall on your home, leaving it uninhabitable and in need of significant repairs. Without insurance, you’d be left to pay for repairs and temporary housing completely out of pocket, a cost that could easily exceed hundreds of thousands of dollars.  The same applies if there is a major water leak from your dishwasher (that ran overnight and no-one saw the huge puddles and damage to all the walls and flooring until morning).

For most families, that’s simply not an option. Additionally, many lenders require proof of homeowners insurance, meaning a lapse in coverage could jeopardize your financing AND your lender will “force place” insurance that YOU pay for even though it only protects your lender. Even if you own your home outright, the peace of mind that comes with knowing you’re covered for catastrophic events, liability claims, or temporary housing costs is worth the investment. And while the premiums can feel high, the cost of recovery without insurance is far higher. Choosing not to carry homeowners insurance could mean risking everything you’ve built.

What a Standard Homeowners Policy Covers

Understanding your policy is really important. A typical California homeowners policy (usually an HO-3 form) covers:

✅ Dwelling and Attached Structures Protection for the home itself, including walls, roof, and built-ins, as well as attached garages.

✅ Detached Structures Limited coverage for fences, sheds, and other detached buildings (usually 10% of the dwelling limit).

✅ Personal Property Belongings like furniture, clothing, and electronics, though high-value items like jewelry often need separate endorsements.

✅ Loss of Use Housing and living expenses if your home is uninhabitable due to a covered loss.

✅ Personal Liability and Medical Payments 

Coverage if someone is injured on your property or if you cause damage to someone else’s property.

What it Doesn’t Typically Cover

Here’s where many homeowners get caught off guard. Standard policies don’t cover:

🚫 Flood and Earth Movement Floods, earthquakes, landslides, and sinkholes require separate policies or endorsements.

🚫 Gradual Damage and Lack of Maintenance Damage from a leaky roof that developed over years or mold from poor drainage is generally excluded.

🚫 Water and Sewer Backup Sewage backups and sump pump overflows often need separate endorsements.

🚫 Building Ordinance or Law Requirements If rebuilding means you must meet new codes, standard policies won’t cover those extra costs unless you have additional coverage.

🚫 Intentional or Illegal Acts Losses caused by intentional acts or crimes, whether by a resident or someone else.

🚫 Business Use of Home Running a business from home? That can void parts of your homeowners coverage unless properly endorsed.

Every policy can vary in its exclusions and limitations. That’s why it’s essential to review your own policy with your broker to make sure you fully understand where your coverage stands.

A Note on Wildfire Coverage

While wildfire damage has generally been included in a standard California homeowners policy, the increasing frequency and severity of fires have made it harder for many homeowners to secure or renew coverage in high-risk areas. 

As many policyholders know, some insurers have withdrawn from writing policies in many regions, leaving homeowners with limited options, often at significantly higher premiums. This is why it’s essential to review your own policy and work closely with a knowledgeable broker who can help you understand your options and any necessary supplemental coverages. 

What Can You Do Right Now?

In California’s challenging insurance environment, it’s more important than ever to be proactive:

✅ Review Your Policy Carefully Know what’s covered and what’s not. Check your dwelling limit, personal property coverage, and endorsements.

✅ Consider Supplemental Policies Flood, earthquake, and water backup coverage can often be added through separate policies or endorsements.

✅ Update Mitigation Measures Wildfire-resistant roofing, ember-resistant vents, and defensible space can sometimes help lower your premium and may even be required to maintain coverage.

✅ Document Your Home’s Condition Keep photos, receipts, and records of improvements. This makes claims smoother and may help secure coverage.

✅ Work with a Knowledgeable Broker Given the complexities of California’s insurance market, having an experienced partner can make all the difference in finding and keeping the right coverage.

Why Trust Us to Guide You?

At H.N. Christensen Insurance Brokers, our family-run business has been serving California homeowners for over 100 years. We’ve seen markets shift, challenges arise, and solutions evolve. 

Our longevity means we’ve built relationships with carriers who are still writing policies in our state, something that’s increasingly rare. We treat our clients like family because, in a way, they are. We’re here to help you protect what matters most.

If you’re concerned about your homeowners insurance, or if you don’t have coverage at all, please reach out to us. Let’s talk about how to build a plan that’s right for you.

Contact Andrea today on LinkedIn. Let’s make sure your home is truly protected.