Take Jeff Duncan, a landlord in San Bernardino, who recently saw his insurance premium jump by $28,000 after his policy was canceled by Farmers. Despite finding a new provider, his expenses have skyrocketed. Combined with rent control limits, Duncan and others in similar situations face shrinking profit margins, making them reconsider their investments in real estate.
“Death by a thousand cuts” is how Duncan describes the situation. A single rent cap might seem manageable, but when you combine it with escalating insurance rates and the costs of maintaining older buildings, the financial pressure becomes overwhelming. For small “mom-and-pop” landlords like David Vasquez, who owns a few rental units in Santa Clara and Manteca, the situation is dire. After State Farm canceled their policy, they were forced to piece together coverage from multiple insurers at a much higher cost. Now, they’re planning rent increases to stay afloat.
Tenants Feeling the Squeeze
For renters, the news isn’t good. With nearly 44% of Californians renting, many of whom are already considered severely cost-burdened (spending over half their income on rent), even modest increases could tip the scales. According to data from Zillow, the median rent in California is $2,850 — a third higher than the national average. If landlords continue passing on their rising insurance costs, tenants could face significant financial strain.
