Two of California’s largest homeowner insurance providers have received approval to raise rates in 2026, a move expected to affect more than 1.1 million policyholders statewide and add new pressure to housing affordability.
Mercury Insurance and CSAA, the AAA-affiliated insurer serving northern and central California, received approval from the California Department of Insurance to increase homeowner premiums by an average of 6.9 percent. Both filings were approved in late 2025 and take effect this year under the state’s Sustainable Insurance Strategy, a reform effort aimed at stabilizing California’s insurance market.
When Rate Changes Take Effect
Mercury, the state’s third-largest homeowner insurance provider, will begin raising premiums for more than 650,000 customers in July. CSAA will implement its rate changes starting March 15, affecting nearly 481,800 homeowners.
While the average increase stands at 6.9 percent for both companies, individual policy changes will vary widely. According to state filings, Mercury’s adjustments could range from a 10 percent decrease to a 60 percent increase, depending on location, wildfire risk, and property characteristics. CSAA’s changes are narrower, with increases ranging from zero to 10 percent.
Insurance regulators note that premium adjustments reflect updated risk modeling, rebuilding costs, and exposure to natural disasters, particularly wildfires.
First Approvals Under New Strategy
The approvals mark the first homeowner rate increases cleared under California’s Sustainable Insurance Strategy, a package of regulatory changes designed to address insurer withdrawals and coverage shortages. State officials have described the reforms as necessary to keep major carriers operating in California.
As part of its filing, Mercury committed to writing at least 2,000 new homeowner policies by July 2028 in areas designated by the Department of Insurance as “distressed,” where coverage options have become limited. CSAA agreed to offer quotes to about 1,000 existing FAIR Plan policyholders who meet its underwriting criteria.
The FAIR Plan is the state’s insurer of last resort and has seen enrollment surge in recent years as private insurers reduced coverage in high-risk areas.
Impact On Homeowners
The expansion commitments could improve access to coverage in hard-hit regions, though higher premiums may offset those gains for many households. Rising insurance costs have become a growing concern for homeowners already facing elevated mortgage rates, property taxes, and maintenance expenses.
In communities across the San Gabriel Valley, including Rosemead, El Monte, and Baldwin Park, insurance premiums vary block by block based on risk factors. Local real estate professionals say buyers now review insurance availability earlier in the homebuying process, particularly near hillside or brush areas.
State officials continue to review additional filings from other insurers, signaling that more rate decisions may follow in 2026.
More information on approved filings and insurance reforms is available through the California Department of Insurance at https://www.insurance.ca.gov.
