2 home insurance companies given green light to increase rates in CA, impacting 660K customers

SAN FRANCISCO (KGO) -- State regulators have given two home insurance companies the green light to raise their rates in California, impacting 660,000 customers.

Mercury General, which is the fifth largest home insurer in the state, will have its policies go up an average of 12 percent for homeowners in late March.

A spokesperson says the rise is due to rising construction costs, not wildfires.

MORE: Here are top 10 Bay Area neighborhoods with the highest non-renewal rates

"Mercury filed for a homeowners rate increase in June 2024 to help offset increasing severity related to plumbing-related water losses and rising repair & construction labor and materials costs. This filing is not related to the recent Southern California wildfires, however, it was designed to allow Mercury to continue to provide high-quality homeowners insurance to a broad array of California consumers."

And, the San Francisco Chronicle reports, policyholders insured through Safeco, a subsidiary of Liberty Mutual, will see an average increase of 7.2 percent in May.

Safeco's increase will not impact condo owners or renters. The Chronicle reports that in December the insurer told regulators that it plans to exit the condo and renters markets in 2026.

Customers impacted by this increase can expect to see the changes on their individual premium on their next renewal after that rate's affective date.

RELATED: California's insurer for people without private coverage needs $1 billion more for LA fires claims

On Feb. 11, the state Insurance Department announced that California's FAIR Plan which provides insurance to homeowners who can't get private coverage needs $1 billion more to pay out claims related to the Los Angeles wildfires.

The FAIR Plan is an insurance pool that all the major private insurers pay into, and the plan then issues policies to people who can't get private insurance because their properties are deemed too risky to insure. The plan, with high premiums and basic coverage, is designed as a temporary option until homeowners can find permanent coverage, but more Californians are relying on it than ever. There were more than 452,000 policies on the Fair Plan in 2024, more than double the number in 2020.

The plan says it's expecting a loss of roughly $4 billion from the Eaton and Palisades Fires, which sparked Jan. 7, destroyed nearly 17,000 structures and killed at least 29 people. Roughly 4,700 claims have been filed as of this week, and the plan has already paid out more than $914 million.

Under a FAIR Plan request approved by the state Tuesday, all insurers doing business in California will have to bear half the cost and can pass on the rest to all policyholders in the form of a one-time fee. Insurers can collect that cost in the next two years. The state Insurance Department must approve those costs.

State officials didn't immediately have details on how large the fee would be. In approving the request, the state allowed the plan to send out notices and collect funding from marketplace insurers within 30 days.

It's the first time the Fair Plan has sought approval for additional money in more than 30 years, the department said.

The Associated Press contributed to this article.