Renters insurance rates in the state of California are among the highest in the nation and that might be due to a number of reasons.
The average renters insurance rate for a sample policyholder and property was $187 per year in 2016 and California’s was $321, according to a study by ValuePenguin. That’s more than 70% higher than the national average.
The study, which gathered hundreds of quotes from five major carriers, also shed light on the cost of renters insurance in California’s largest cities – most of which have much higher premiums than other large cities in the country.
Beverly Hills, Los Angeles and San Francisco have rates of $531, $509 and $348, respectively. Considering the protection renters insurance includes, that’s still relatively inexpensive. But it also doesn’t exactly feel cheap compared to other large cities in the U.S. An identical study found that average renters insurance rate in New York City was $284. In Atlanta, the average was $465 and Chicago’s average was only $338 (the highest in the state of Illinois).
Large cities in California could be the driver behind the average cost of premiums in the state. Four of the nation’s largest cities are in California. However, data from the same study doesn’t support that argument.
There are many factors that might contribute to the high renters insurance rates in California and apply to every region or specific city.
Theft is wrongfully latched onto as a reason for high renters insurance rates. If it were a dominant factor, then places with higher likelihoods of being a victim would have higher rates and they don’t. Large cities and municipalities nearby them have the highest renters insurance rates, but Smaller cities outside major metropolitan areas have higher burglaries per capita (822 burglaries per 100,000 people) than in the biggest cities (727 per 100,000 people).
Wildfires are prevalent in California, but they aren’t responsible for high rates overall either. While some homeowners and tenants face increasing insurance costs due to wildfires, other fires cause far more damage. The Midwest and the Northeast suffered more fire losses per capita than the West (including California) did in 2012.
Earthquakes in California aren’t the cause of higher renters insurance in the state. Most renters insurance policies do not cover earthquake damage, so it isn’t considered when pricing the standard premium.
Renters insurance rates in California are probably high as a result of the frequency and severity of fires, bodily injury and property damage liability claims and water damage. Although claims related to fires, water damage and liability might not happen as frequently as others, they are exceptionally costly.
The population density of large cities might be a reason these claims happen more frequently or be more severe than in other areas in California and the country.
