Certain Californians pay larger share of money on home insurance, study finds
Low-income California homeowners paid a larger share of their money on property insurance in 2023 than residents with higher incomes, according to an analysis published Friday by researchers at the UC Berkeley Terner Center for Housing Innovation.
That could continue as insurance rates rise in the state, due to greater risks of catastrophic wildfires and changes to regulations meant to prevent companies from restricting business in California, the report said, and place larger burdens on residents with lesser means.
Households with an annual income below $66,000 paid an average of about 3% of their income on home insurance that year.
“These are the same households most likely to face high housing cost burdens overall and least likely to be able to manage rate increases,” the study’s authors wrote. They said they used newly available state and federal data for the analysis.
The typical household paid about 1%.
The report also found people living in mobile homes had higher insurance costs as a share of their home value in 2023 than other housing types. The median cost was $483 per $100,000 of value for people living in the mobile dwellings. It was $182 per $100,000 for people in single-family houses.
California’s insurance challenges are well documented as companies have dropped large numbers of policyholders and charged higher prices for policies. A rapidly growing number of Californians are turning to a state backup insurance provider for coverage.
Yet, the report noted that as recently as 2023 the median home insurance price in California was in the middle of all 50 states.
That may surprise people, one of the co-authors, Zack Subin, said in a statement. “But low-income homeowners already spend more of their income on insurance, and we expect that as costs increase, this affordability challenge will grow,” he said. “Policymakers need to engage in planning to adapt the state’s housing stock to climate change impacts and develop strategies that protect vulnerable homeowners from being displaced.”
