California Home Sales Canceled Due to Unaffordable Insurance

One in five California home sales canceled last year as homeowners struggle with skyrocketing insurance costs

Published on Feb. 25, 2026

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A growing home insurance crisis in California has led to nearly one-in-five real estate sales being canceled in the state last year, as homeowners face eye-watering rate increases, policy cancellations, and rejected claims from major insurers. The crisis has hit homeowners like the Crawfords, who saw their annual insurance bill jump from $500 to over $44,000, with the only other option being an $80,000 quote from Lloyd's of London.

Why it matters

California's housing market, the largest and most expensive in the country, is being severely disrupted by the insurance crisis, with the state struggling to draw insurers back after many stopped offering new policies, especially in fire-prone areas. This could serve as a warning for other disaster-prone states facing similar challenges.

The details

The roots of California's insurance crisis go back years, with the state's tough rate caps keeping premiums low but eventually leading insurers to balk, saying they couldn't charge enough to cover rising wildfire and other losses made worse by climate change. Insurers didn't renew tens of thousands of policies, especially in fire-prone areas. New rules implemented last year require home insurers to pledge to sell new policies in high-risk wildfire zones in return for allowing them to charge higher rates, but the response has been tepid, with major insurers like Allstate and Farmers only committing to a fraction of the policies they've dropped.

  • In 2012, the Crawfords paid about $500 per month to insure their home in Agoura Hills.
  • Last month, the Crawfords received a bill for over $44,000 per year to insure their home.
  • In 2024, California regulators approved a 34% rate increase for Allstate.
  • In 2028, Farmers has pledged to add at least 5,596 policies in high-risk areas as part of a request for a 6.99% rate increase.

The players

Glenn and Lorraine Crawford

Homeowners in Agoura Hills, California who saw their annual home insurance bill jump from $500 to over $44,000.

Lloyd's of London

An insurer that quoted the Crawfords $80,000 per year to insure their home.

State Farm

One of the biggest home insurers in California that is no longer selling new policies in the state.

Allstate

A major home insurer in California that has no "growth aspirations" in the state despite receiving a 34% rate increase approval.

Farmers Insurance

The second-biggest home insurer in California that has pledged to add at least 5,596 policies in high-risk areas by 2028, a fraction of the 59,806 policies it has dropped in the previous two years.

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What they’re saying

“We must not let individuals continue to damage private property in San Francisco.”

— Robert Jenkins, San Francisco resident (San Francisco Chronicle)

What’s next

The California Department of Insurance is expected to continue working on new regulations and incentives to try to draw more insurers back to the state's high-risk wildfire zones.

The takeaway

California's home insurance crisis, marked by skyrocketing rates, policy cancellations, and rejected claims, is severely disrupting the state's housing market and could serve as a warning for other disaster-prone regions facing similar challenges in balancing affordability and risk for homeowners.