it’s become clear that California’s housing crisis is being exacerbated by rising insurance costs. Landlords are finding themselves in a tough spot as insurers pull out of the state or raise premiums due to the increasing risks of wildfires and the rising cost of rebuilding properties. With nearly half of California’s residents renting, these added costs are trickling down to tenants.
In recent months, major insurance providers like State Farm and Allstate have stopped writing new policies in California, while others have hiked rates significantly. Even properties outside of high-risk wildfire zones are feeling the effects. For landlords, the only options are often switching to the more costly FAIR Plan, a last-resort insurance option, or piecing together coverage from out-of-state providers. Unfortunately, these added costs are making it nearly impossible for small landlords to stay afloat without raising rents.
Landlords Caught Between Rising Costs and Rent Control
California’s rent control laws, which typically cap annual rent increases at 5% plus inflation, or a maximum of 10%, are meant to protect tenants from sudden spikes. However, with insurance premiums increasing by as much as 150% in some cases, small property owners are struggling to keep their properties profitable.
