California’s two biggest insurance companies are looking at significant increases in premiums for single-family homes, which could mean more expensive bills for homeowners.
The Automobile Club Mutual Insurance Exchange, part of AAA, has proposed an 11.2% hike in rates for homeowners. In contrast, renters of condos and houses could see decreases of 20.5% and 27%, respectively, as reported by a local publication citing a new filing with the California Department of Insurance.
If this proposal gets the green light, the effects will differ widely. Some might enjoy reductions of up to 80%, while others could see their annual costs jump from about $1,650 to $13,100.
The Travelers Insurance company is also mulling over a premium increase of 6.9% for homeowners, but they’re planning to lower rates for renters—by 17%—and for condo owners and landlords, by 22.8% and 19.6%, respectively.
Interestingly, only around 25% of customers would actually benefit from lower rates under Travelers’ plan, meaning about 60% of homeowners may face higher payments.
In total, these two insurers cover roughly 760,000 homes in the state.
Mike Muhammad, who oversees insurance operations at the Auto Club, mentioned that they’re committed to ensuring a sustainable insurance future for their members and the state.
Both insurance companies indicated they would look to increase the number of new policies if their proposals are accepted.
Other insurers, such as Mercury Insurance and USAA, have already put forward rate increases that have been approved. This overall rise in rates is tied to the Sustainable Insurance Strategy reform, aimed at changing how premium rates are established.
