California Home Insurance and Real Estate: What San Diego Home Buyers Need to Know in 2026 and 2027

If you're buying a home in California, homeowners insurance deserves a place in the conversation much earlier than it used to.

For years, most buyers focused primarily on the purchase price, mortgage rate, down payment and property taxes.

Those things still matter.

But California's insurance market has changed enough that I now encourage buyers to investigate the insurance side of a property before they get too deep into the transaction.

That doesn't mean buyers should panic.

It doesn't mean homes in California suddenly can't be insured.

And it certainly doesn't mean people should stop buying homes.

It means insurance has become another important part of good due diligence.

According to the California Department of Insurance, the state has faced an insurance availability crisis driven in part by climate-related risk and global inflation. The Department is currently implementing its Sustainable Insurance Strategy with the goal of improving availability, expanding coverage in distressed areas and reducing reliance on the California FAIR Plan.

That's an important distinction.

There are real problems in the insurance market.

There are also ongoing efforts to improve it.

As a buyer, your job isn't to predict what California's insurance market will look like five years from now.

Your job is much simpler:

Understand what the home you're considering will cost to insure today.

Why Homeowners Insurance Matters When Calculating Affordability

One of the biggest mistakes buyers can make is looking only at the mortgage payment.

Your actual housing expense can include:

Mortgage principal and interest

Property taxes

Homeowners insurance

HOA dues, if applicable

Utilities

Maintenance

Possible special assessments if you're purchasing in an HOA

Other property-specific expenses

That's why two homes with the same purchase price don't necessarily have the same monthly cost.

Imagine you're comparing two properties.

The mortgage payment is similar.

Property taxes are similar.

But one receives a significantly higher insurance quote than the other.

Your actual cost of owning those homes could be very different.

That doesn't automatically make the more expensive property a bad purchase.

It simply changes the math.

When Should a Home Buyer Start Looking Into Insurance?

I don't recommend waiting until the last minute.

Once you're seriously considering a particular property, insurance should become one of the questions you investigate.

The exact timing will depend on your transaction, lender and insurance professional, but buyers should generally avoid treating homeowners insurance as something they'll figure out after everything else is complete.

Ask early enough that you have time to understand:

Is coverage available?

What might the premium be?

What deductible options are available?

Are there property-specific concerns?

Are there wildfire or other catastrophe-related considerations?

Would additional coverage be recommended?

Those are questions for a qualified insurance professional, but as your Realtor, I want to make sure you know to ask them.

Can Homeowners Insurance Affect Your Mortgage?

Yes.

Property insurance isn't just another monthly household bill.

Lenders generally require the home securing the mortgage to carry acceptable property insurance.

That means an insurance issue can potentially become a financing issue.

This is one reason I don't want buyers discovering an unexpected insurance problem days before closing.

A better approach is:

Find a home you like.

Investigate the property.

Get the lender involved.

Get your insurance professional involved.

Understand the entire financial picture.

Then make your decision with better information.

What Is the California FAIR Plan?

You've probably heard more about the California FAIR Plan over the last few years.

The California Department of Insurance describes the FAIR Plan as the state's last-resort insurance option for homeowners who cannot obtain coverage through the traditional market. The Department reports that FAIR Plan policy counts grew during recent market disruptions and that reducing reliance on the FAIR Plan is one goal of the state's insurance reforms.

A FAIR Plan policy is not automatically a reason to walk away from a house.

It is, however, a reason to understand exactly what you're purchasing.

Coverage under the FAIR Plan may differ from a standard homeowners policy, and a homeowner may need other coverage depending on the situation.

That's something to discuss directly with a licensed insurance professional.

The mistake would be assuming either:

"This house uses the FAIR Plan, so it must be terrible."

or

"It's insured somehow, so I don't need to ask any more questions."

Neither approach is good due diligence.

Is California's Insurance Situation Getting Any Better?

There are some encouraging signs.

The Department of Insurance reported in 2026 that multiple insurance groups were expanding in California under the Sustainable Insurance Strategy. It also announced additional insurer participation during the year.

That doesn't mean the issue is solved.

Insurance availability can still vary significantly depending on the property and location.

But this is exactly why buyers should avoid treating every California insurance headline as though it applies equally to every home.

Real estate is property-specific.

Insurance increasingly is too.

Does a VA Loan Require Homeowners Insurance?

Veterans and active-duty service members using VA financing still need to pay attention to property insurance.

Using a VA loan doesn't make the underlying property immune from lender insurance requirements.

That's an important point for military buyers in San Diego.

The VA loan can be a tremendous benefit for eligible borrowers, but your decision still needs to be based on the total cost of homeownership, not simply the mortgage amount for which you're approved.

A Note for San Diego Military Families: BAH Is Not a Home Affordability Calculator

This comes up frequently with active-duty buyers.

It's natural to compare your Basic Allowance for Housing with a potential mortgage payment.

BAH is useful information.

But I wouldn't use BAH by itself to determine what home you can comfortably afford.

Think about the entire monthly picture.

For example:

Mortgage payment.

Property taxes.

Homeowners insurance.

HOA dues.

Utilities.

Maintenance.

Your commute to your duty station.

Your household's other financial obligations.

Your personal savings goals.

Two families receiving similar BAH can have very different financial situations.

That's why I want military buyers thinking about what payment feels comfortable for their household, not simply how much a lender says they can borrow.

What If the Insurance Quote Is Higher Than You Expected?

First, get information.

A high quote doesn't automatically mean you should cancel the purchase.

Talk with your insurance professional.

Find out what is driving the cost.

Ask whether there are other available options.

Then have your lender update the numbers if necessary.

You can evaluate whether the home still fits your comfortable monthly budget.

Sometimes it will.

Sometimes the insurance cost may change how you feel about the property.

Both outcomes are useful.

The goal is knowing before you close.

Questions San Diego Home Buyers Should Ask About Insurance

Before purchasing, consider asking your insurance professional:

What would it cost to insure this specific property?

What does the proposed policy cover?

What deductibles apply?

Is wildfire exposure affecting the policy?

Would the FAIR Plan be involved?

Is any supplemental coverage needed?

Are there improvements that could potentially affect insurability or premium pricing?

Does the property's roof, electrical system or other characteristics matter to the carrier?

Don't assume every question will apply to every house.

They are simply good starting points.

Does This Mean Buying in California Is Too Risky?

No.

I wouldn't make that blanket statement at all.

Millions of Californians own homes, and California continues to have an active housing market.

The lesson isn't "don't buy."

The lesson is:

Know your numbers.

Insurance is one of those numbers.

A well-informed buyer doesn't ignore potential problems.

A well-informed buyer investigates them and decides whether they are manageable.

That's how I want my clients approaching real estate.

Thinking About Buying a Home in San Diego?

If you're looking at a property and you're not sure what questions you should be asking about insurance, send me the address.

I'm not an insurance agent, and I'll never pretend to be one.

But I can help you identify the real estate and financing questions we should be discussing and make sure the right professionals are involved early.

That's particularly important if you're PCSing to San Diego, using a VA loan or trying to make a decision on a tight timeline.

You don't need to have everything figured out before reaching out.

Sometimes the conversation can simply start with:

"Ryan, we're thinking about this house. What should we be checking?"

I'm always happy to help.

Frequently Asked Questions

Can I buy a California home if insurance is difficult to obtain?
Potentially, yes. What matters is whether acceptable coverage is available for the specific property and whether it satisfies applicable lender requirements. Talk with your insurance professional and lender early.

Should I get an insurance quote before making an offer?
The best timing depends on the situation, but buyers should investigate insurance early enough that the answer isn't a last-minute surprise.

Does a VA loan eliminate the need for homeowners insurance?
No. VA financing does not eliminate property insurance considerations.

Is the California FAIR Plan bad?
The FAIR Plan is designed as coverage for property owners unable to find coverage in the traditional market. Whether a property using the FAIR Plan makes sense for you depends on coverage, cost and your individual circumstances.

Can insurance change how much house I can afford?
Absolutely. Your total monthly housing expense matters more than the mortgage payment alone.

About the Author

Ryan Caron is a Navy veteran and full-time Realtor serving buyers, sellers, veterans and military families throughout San Diego County.

Ryan Caron
The Caron Group
Real Broker
DRE #02161807

Have questions? Just reach out. I'm always happy to help.

Sources: California Department of Insurance Sustainable Insurance Strategy and 2026 Department updates.