Landlord Insurance in California: Costs, Requirements & Best Providers

The California problem is availability, not price

California’s benchmark of $1,820 is about 27% below the national average. A landlord (DP-3) policy on the same $400,000 house would typically run about $2,090 to $2,280. That’s cheap for a state with this much wildfire and earthquake risk, and the reason is regulation. Under Proposition 103, insurers need state approval before raising rates.

When insurers couldn’t raise prices to match wildfire losses, many stopped taking new business. State Farm stopped accepting new property applications in 2023, and Allstate paused new homeowners policies in 2022. Non-renewal letters are now common in the Sierra foothills, the Bay Area hills and parts of Southern California. After the January 2025 Los Angeles fires, the FAIR Plan needed a $1 billion assessment on its member insurers to pay claims.

How the FAIR Plan and DIC combination works

The California FAIR Plan is the insurer of last resort. Its dwelling policy covers fire, lightning, smoke and internal explosion, with optional add-ons, but no liability and little water coverage. Most landlords on the FAIR Plan buy a second policy, called difference in conditions, that adds liability, water damage, theft and loss of rent.

That means two premiums, two deductibles and two renewals. When you shop, compare the combined cost against any private quote you can get.

Some private quotes come from surplus-lines insurers, which can write policies the regulated market won’t. Obie notes that some of its policies are non-admitted in some states. Non-admitted policies aren’t backed by the state guaranty fund if the insurer fails, so ask before you bind.

Earthquake, mudslides and atmospheric rivers

Landlord policies exclude earthquake. You buy it separately, with a percentage deductible that often starts at 10% of the dwelling limit. Older wood-frame apartment buildings with tuck-under parking face mandatory soft-story retrofit ordinances in Los Angeles and San Francisco, and a completed retrofit can help with earthquake pricing.

Mudslides after a fire are tricky. Earth movement is excluded from landlord policies, but a flood policy from the National Flood Insurance Program covers mudflow. In burn-scar areas, that flood policy matters more than the flood map suggests.

Ways to lower the premium

1. Use the wildfire mitigation discounts. California’s Safer from Wildfires rules require insurers to recognize mitigation such as a Class A roof, ember-resistant vents, a 5-foot noncombustible zone around the house and cleared defensible space. Document each one with photos.
2. Shop through a broker with several markets. If you’ve been non-renewed, a broker can check admitted carriers, surplus lines and the FAIR Plan in one pass.
3. Raise deductibles on the DIC policy if the FAIR Plan premium is the big line.
4. Buy liability through an umbrella if the DIC policy’s limits are low.

California deposit rules and your risk

Since July 1, 2024, deposits are capped at one month’s rent. A small landlord, meaning a natural person or family LLC or trust that owns no more than two rental properties with four or fewer units total, may charge up to two months, except to service members (Cal. Civ. Code § 1950.5). You have 21 days to return it with an itemized statement, with receipts for deductions over $125. Move-out photos are required to support deductions from April 1, 2025, and move-in photos from July 1, 2025. Keep them; the same photos are your best evidence on an insurance claim.