State of Property Insurance in California 2025
In May 2025, California’s Insurance Commissioner approved an emergency rate hike allowing State Farm to increase premiums on multifamily properties by up to 38%, effective June 1. The decision aims to prevent the insurer from expanding policy non-renewals later this year. This move underscores growing concerns among multifamily property owners about rising insurance costs, especially as the state continues to recover from severe wildfires earlier in 2025.
This development will impact not only property owners insured by State Farm but could also affect landlords with other providers. It reflects a broader trend, as many major insurance companies have scaled back or exited California’s property insurance market since 2022. That is why it's important for property owners and investors to understand the state of the insurance market in California.
Impact on the Market
As of 2023, the top 10 insurance providers in California accounted for 52% of all property insurance premiums. State Farm, the largest among them, held a 9.1% market share and wrote $8.8 billion in premiums. Securing new coverage or renewing existing policies has become increasingly difficult, as major insurers scale back. State Farm has stopped accepting new property insurance applications, while Hartford, Travelers, and Nationwide are actively non-renewing policies.
The remaining 48% of California’s property insurance market is spread across roughly 200 providers. While this may suggest broader options for investors, many of these insurers have limited geographic coverage or offer reduced policy limits, making them less reliable or consistent across all markets.
Although rising insurance costs will place added pressure on investors, California still does not rank among the most expensive states for property insurance. As of 2025, four of the five U.S. cities with the highest insurance premiums are located in Florida. In California, Oakland ranked highest at 17th, followed by San Francisco at 21st and Los Angeles at 31st.
How to Mitigate the Cost
As insurance premiums continue to change, there are steps a property owner can explore to reduce their overall cost.
Raise Deductible: Raising your deductible can reduce your monthly premium, but it also increases your out-of-pocket costs if a claim is filed. Additionally, lender agreements may require a minimum or maximum deductible, which can limit your flexibility.
Capital Improvements: Installing fire suppression systems, upgrading the roof, and modernizing the electrical system with updated wiring and circuit breakers can improve a property's insurability and potentially lower monthly premiums. Addressing safety concerns and resolving underlying structural issues can also help bring down premiums.
Combine Policies: If an investor owns multiple properties, they may be able to reduce expenses by bundling their policies with a single provider.
Contractual Risk Transfer: Transferring risk to third parties, such as subcontractors or maintenance providers, can help limit a property owner’s liability for their work. Requiring tenants to carry renters insurance as part of the lease agreement further reduces the owner's exposure to claims.
Learn More
Marcus & Millichap has provided a special report that looks at the state of the insurance market in California and how it will impact the investment real estate market. You can download the report for free.