Is California’s Home Insurance Market Finally Starting to Improve?

For the past several years, insurance has become one of the biggest headaches in California real estate.

Homeowners have faced rising premiums.

Some carriers reduced their exposure.

Some stopped accepting new customers.

Buyers discovered that obtaining insurance could become an unexpected obstacle during escrow.

Now there is finally a development worth watching.

On September 18, 2026, the California Department of Insurance announced that State Farm and Allstate filed plans to begin writing new residential policies in California again.

That's meaningful.

But it doesn't mean California's insurance problem is over.

Why This Matters

State Farm stopped accepting new California homeowners insurance applications in 2023, while Allstate had stopped writing new homeowner policies the year before.

Those decisions became symbols of California's growing property-insurance crisis.

Their plans to reenter the new-policy market represent an important change in direction.

For homeowners and homebuyers, more insurers competing for business could eventually mean more options.

And California desperately needs more options.

What Changed?

California has been implementing what the Department of Insurance calls its Sustainable Insurance Strategy.

The reforms are designed to increase insurance availability while changing the regulatory framework insurers operate under.

One objective is to encourage insurers to write more policies in wildfire-distressed areas and reduce reliance on California's FAIR Plan.

As of the Department's September announcement, 12 insurance groups had filed or received approval under the new framework.

That's movement.

It isn't mission accomplished.

Why Insurance Matters to Homebuyers

Here's where the mortgage side enters the conversation.

If you're financing a home, your lender generally needs evidence of acceptable property insurance before the loan can close.

So imagine this:

You qualify for the mortgage.

Your income works.

Your assets work.

Your credit works.

The appraisal works.

But then insurance on the property becomes difficult or unexpectedly expensive.

That can affect the transaction.

Insurance isn't something California buyers should leave until the last minute anymore.

Insurance Is Part of Affordability

Buyers understandably focus on the mortgage payment.

But the real housing expense includes more.

Principal and interest.

Property taxes.

Homeowners insurance.

Potential HOA dues.

And, depending on the property, additional coverage.

If an insurance quote is dramatically higher than expected, it can change the economics of buying the property.

That is why I've increasingly encouraged California buyers to investigate insurance earlier in the process.

Does This Mean California Insurance Is Fixed?

No.

Two major insurers planning to write new policies again is encouraging, but availability can still depend on the property, location, wildfire exposure and individual carrier guidelines.

The California Department of Insurance itself describes its strategy as an effort to stabilize the market and increase coverage availability statewide.

Stabilization takes time.

Homeowners who currently have coverage shouldn't assume a better alternative automatically exists.

Buyers shouldn't assume every property will suddenly be easy to insure.

And sellers shouldn't assume insurance has stopped being relevant to a transaction.

But Direction Matters

California's housing market needs a functioning insurance market.

Buyers need access to coverage.

Homeowners need sustainable options.

Lenders need properties that can satisfy insurance requirements.

And communities need alternatives to relying increasingly on last-resort coverage.

The State Farm and Allstate filings don't solve all of that overnight.

But after several years of headlines about insurers retreating from California, seeing major carriers moving toward writing new business again is significant.

For once, the California insurance story may be moving in the other direction.

We'll see if it continues.

About the Author

Michael Belfor is a Branch Manager and Loan Originator with American Pacific Mortgage with approximately 24 years of mortgage experience. He has been recognized in APM's President's Club and Top 1% since 2017. NMLS 264700 | DRE 01878769.

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State Farm and Allstate have filed plans to write new California residential policies again. Here’s what the change could mean for homeowners and buyers.

Is State Farm writing homeowners insurance in California again? Is Allstate returning to California? Is California's home insurance market improving? Can insurance affect mortgage approval?