Insurance Is Now Part of Every Real Estate Conversation — Here's What You Need to Know
A message from the Gloria Shepard Team at Compass
Several years ago, homeowner's insurance was a formality, something you handled a week before closing and rarely thought about again. That's no longer true anywhere in California, and San Diego is not immune. Whether you're a longtime homeowner facing a renewal notice, a seller wondering how insurance will affect your buyer pool, or a buyer trying to budget accurately, this is now a conversation worth having early — not after you're in contract.
How We Got Here
The numbers tell the story plainly. Statewide, average California homeowner insurance premiums rose 84% between the end of 2020 and March 2026, while average deductibles climbed from roughly $1,800 to $2,550 over the same period. Over that stretch, seven of California's twelve largest home insurers reduced or halted new underwriting in the state, pulling back largely in response to escalating wildfire losses and a rate-setting framework that hadn't kept pace with actual risk.
84%
Increase in California homeowner insurance premiums
(2020–2026)
$2,550
Average deductible
March 2026
That pullback pushed a growing number of homeowners onto the California FAIR Plan, the state's insurer of last resort. FAIR Plan enrollment has grown from under 2% of California homes to about 5% as of March 2026, and notably, it now backs roughly 6% of new single-family mortgage originations, twice its overall market share in moderate and low-risk zip codes. In plain terms: it's no longer just fire-country properties leaning on the FAIR Plan. It's showing up in mortgage files well outside the areas you'd expect.
5%
California homes currently insured by the FAIR Plan
6%
New single-family mortgages backed by the FAIR Plan
It's also worth understanding what a FAIR Plan policy actually covers. It's a narrower product — by statute, not as broad as a traditional homeowners' policy, though it is a fully sound, guaranteed policy that satisfies lender requirements and covers fire, the primary risk it was designed for. Everything else — water damage, liability, theft — typically requires a separate "difference-in-conditions" policy layered on top, at additional cost.
Signs the Market Is Stabilizing — Slowly
The good news: there's real movement toward repair. Insurance Commissioner Ricardo Lara's Sustainable Insurance Strategy has begun coaxing carriers back into the state in exchange for rate flexibility. Mercury and CSAA received early approvals under the program and have committed to writing tens of thousands of new policies, including active efforts to move homeowners off the FAIR Plan and back into standard coverage. Travelers announced in April it would expand its California homeowners business, a notable vote of confidence from a top-ten national carrier. Legislators have also introduced the Make It FAIR Act, aimed at forcing the FAIR Plan itself to modernize its claims handling and expand what it covers.
"The freeze on new capacity is beginning to thaw, giving California homeowners more insurance options than they've had in recent years."
None of this means premiums are heading back down. It does mean the freeze on new capacity is thawing, and homeowners who've been stuck with limited options are starting to see more of them.
What This Means Locally
San Diego's homeowners’ insurance costs still run modestly below the state average, and most of the county carries moderate rather than extreme wildfire risk. But two things matter for buyers and sellers here specifically:
Insurance has become part of due diligence. For years, we've been advising buyers, especially in canyon-adjacent, brush-heavy, or high fire east/north county communities, to get an actual insurance quote before making an offer or during their contingency period, not on the way to closing.
A property that looked comfortably within budget can look very different once you know whether it qualifies for standard coverage or lands on the FAIR Plan.
Home hardening is starting to pay off in real dollars. Several carriers are now offering meaningful discounts and multi-year renewal guarantees for homes that earn a Wildfire Prepared Home designation, think ember-resistant roofing, vent screening, and defensible space.
For sellers in higher-risk pockets, having this documentation ready can be a genuine differentiator with buyers who are insurance-conscious.
A Few Practical Steps
If you're selling, especially in a higher-risk zip code, get ahead of the conversation.
Know your current premium, whether you're on the FAIR Plan or standard market, and whether any hardening upgrades might help a buyer qualify for better coverage.
If you're buying, request an insurance quote before making an offer or as part of your inspection contingency, not as an afterthought.
It's a simple task that can save a serious surprise later.
If you're already a homeowner, shop your renewal at least 60–90 days out rather than waiting for the notice.
The market is moving fast enough that last year's quote may no longer be your best option.
A Note From Our Team
Insurance has quietly become one of the more important numbers in San Diego and Santaluz homeownership, and it's a topic we walk through with every client — buyer or seller — as part of our process. If you'd like a candid read on how insurance is shaping a particular community or your personal property, we're always happy to talk it through and provide referral resources. You can call or text us at (619) 417-5564 or email us at gloria@gshepardhomes.com.
Questions about homeowners insurance and how it may impact your next move?
Whether you're buying, selling, or simply planning ahead, we're here to help you navigate today's evolving real estate landscape with confidence.
The Gloria Shepard Team | Compass
Market and insurance data sourced from the California Department of Insurance, Stanford Climate and Energy Policy Program, and industry reporting current as of July 2026. All figures are for informational purposes and do not constitute insurance, legal, or financial advice. Homeowners should consult a licensed insurance producer regarding coverage decisions.
