California Homeowners Face Higher Insurance Premiums
Home insurance rates are on the rise for a significant number of California policyholders, with two major insurers receiving approval to increase their premiums later this year. Mercury General and Safeco, a subsidiary of Liberty Mutual, are set to implement these changes, affecting a total of over 660,000 customers.
Mercury General, the fifth-largest home insurer in the state, will begin raising rates for its 579,300 homeowners, condo owners, and dwelling rental policyholders starting in late March. Homeowners can expect an average increase of 12%, while condo and rental policies will see lesser increases, according to filings with the California Department of Insurance.
Those insured through Safeco, a subsidiary of the fourth-largest insurer Liberty Mutual, will also see rate hikes, averaging 7.2%, beginning in May. This affects approximately 86,700 customers. Liberty Mutual’s rate adjustments won’t impact condo owners or renters, as the company plans to exit these markets in 2026, citing a need for a “sustainable business path forward in California.”
Customers should anticipate seeing the impact on their individual premiums at their next renewal following the effective date of these rate increases. The specific changes will vary; for Liberty Mutual customers, rates could rise between 2% and 15%. Mercury customers face an average increase of 12.3% for homeowners, 9.4% for condo owners, and 7.5% for renters.
While neither insurer has indicated plans for widespread non-renewals, both have informed regulators that they’re restricting the areas where they’ll write new policies. Safeco has already stated since 2023 that it will not offer new insurance or renew existing policies in certain parts of the Bay Area.
“Most property insurance consumers countrywide are experiencing higher premiums. Significant inflationary pressures on labor and construction costs, and supply chain constraints that limit materials selection and increase repair/building times, are impacting the cost of insurance,” a Liberty Mutual spokesperson stated.
A Mercury spokesperson attributed the rate increases to the rising costs associated with plumbing-related water damage, as well as increased costs of repairs, construction labor, and materials.
While these rate increases were submitted months before the recent Southern California wildfires, both companies reportedly anticipate substantial losses from the fires. During an earnings call earlier this month, Mercury executives estimated they would pay between $1.6 billion and $2 billion to wildfire survivors. Liberty Mutual expects losses exceeding $1.4 billion, according to the industry publication Insurance Insider.
AM Best, a global credit rating agency for insurance companies, announced a downgrade of Mercury’s financial outlook to negative due to the uncertainties surrounding its wildfire losses, although the company’s overall financial strength rating remains at A.
According to the Department of Insurance, insurers, including the FAIR Plan, have paid $6.9 billion in wildfire claims as of February 5.
Mercury last raised its average rate by 12.6% in 2023 and just under 7% in 2024. Safeco previously increased rates by 10.5% in 2024 and 3.5% in 2023.
