Living in Coronado means you're part of one of Southern California's most desirable communities—a peninsula paradise with the iconic Hotel del Coronado, pristine beaches, and some of the most expensive real estate in the country. But here's what most people don't realize until they're shopping for home insurance: protecting a coastal property in California isn't as straightforward as it used to be.
The California insurance market is going through major changes in 2025 and 2026. Major carriers have pulled back from writing new policies, rates are climbing 20-35% across the state, and coastal homeowners face additional challenges around flood coverage. If you own a home in Coronado—where the median value hovers around $2.4 million—understanding your insurance options isn't just important, it's essential.
The California Home Insurance Market in 2025-2026
Let's talk about what's happening statewide first, because it directly affects your options in Coronado. California home insurance premiums are projected to rise roughly 20% or more by the end of 2025, with some carriers requesting increases of 30% or more when multiple filings are combined. Looking ahead to 2026, California's FAIR Plan—the state's insurer of last resort—has proposed raising rates by an average of more than 35%.
Why the dramatic increases? Extreme wildfire losses, climate-related claims, and capital strain have pushed insurers to either raise rates significantly or leave the California market entirely. State Farm, Allstate, and Farmers have all stopped writing new homeowners policies in high-risk areas. This shrinks your options and drives up premiums in the remaining admitted and surplus-line markets.
For Coronado specifically, reinsurers are increasingly differentiating between lower-risk regions and high-risk coastal or flood-exposed areas. Coastal San Diego County falls firmly into that second category, which means capacity stays tight and pricing remains elevated—even if you've never filed a claim.
Coastal Flood Risk: What Coronado Homeowners Need to Know
Here's the most important thing to understand: standard homeowners insurance does not cover flood damage. Not a little bit, not under certain circumstances—it just doesn't cover it at all. If coastal flooding damages your home, you're out of luck unless you have a separate flood insurance policy.
Recent FEMA Flood Insurance Rate Map (FIRM) updates have changed flood zone designations for many coastal San Diego communities, with most coastal properties seeing their flood ranking shift from low or moderate risk to high risk of flooding. Coronado properties may fall into several flood zone categories: AE, AO, VE, or A zones are high-hazard areas that comprise the Special Flood Hazard Area (SFHA), also known as the 100-year floodplain. Zone VE is particularly significant for coastal areas—it's defined by high-velocity wave action and comes with special building requirements, including elevating structures on piles or columns.
If your lender determines that your property is in the SFHA, they'll require you to purchase flood insurance as a condition of your mortgage. Even if it's not required, it's worth considering. The National Flood Insurance Program (NFIP) makes federally backed flood insurance available to property owners in participating communities, and the City of Coronado participates in the program. You can check your specific property's flood zone by contacting FEMA at 1-877-FEMA-MAP or visiting the FEMA Map Service Center online.
High Property Values and Insurance Costs
Coronado isn't just expensive—it's one of the priciest real estate markets in California. The average home value in 2025 stands at approximately $2.42 million, with the median sale price around $3.1 million. Some reports show homes selling for over $2.8 million on average, and the market remains highly desirable for luxury coastal living, partly thanks to the Hotel del Coronado's continued appeal as a historic landmark.
Why does this matter for insurance? Because your home insurance premium is largely based on replacement cost—what it would actually cost to rebuild your home from the ground up if it were destroyed. High-value and coastal homes face higher insurance costs due to higher reconstruction costs and increased climate risk. New state rules in California allow carriers to pass reinsurance costs to consumers, capped but expected to bump rate filings 30-40% in 2025.
On average, homes in Coronado sell after just 43 days on the market, compared to 78 days last year. This indicates sustained demand and limited inventory, which keeps property values—and replacement costs—high. When you're insuring a multi-million-dollar property, even small percentage increases in rates translate to hundreds or thousands of dollars more per year.
What Your Home Insurance Covers (and What It Doesn't)
Standard California homeowners insurance typically covers fire and wildfire damage, wind and hail damage, theft, vandalism, and liability if someone is injured on your property. It will also cover additional living expenses if your home becomes uninhabitable due to a covered loss—important if you need to rent elsewhere while repairs are completed.
What it doesn't cover: floods, earthquakes, and sinkholes. These require separate policies or endorsements. California law requires every insurance company doing business in the state to offer an option to add earthquake coverage, which you should seriously consider given California's seismic activity. Earthquake insurance is a separate endorsement or policy that you add to your homeowners coverage.
Given Coronado's coastal location, the lack of flood coverage in standard policies is particularly significant. Even if you're not in a designated high-risk flood zone, coastal storms and sea-level rise mean flooding is a real possibility. Talk to your insurance agent about adding flood coverage through NFIP or a private flood insurance carrier.
The FAIR Plan: Your Last-Resort Option
If you're having trouble finding coverage in the standard market—and many California homeowners are—the California FAIR Plan is a state-backed insurance option for high-risk properties. The number of FAIR Plan policies nearly doubled from April 2018 to December 2021 and has continued to rise, with total exposure exceeding $300 billion at the end of 2023.
Here's what you need to know: the FAIR Plan is more expensive than traditional policies and offers limited protection. It's meant to be a temporary safety net while you search for standard coverage, not a long-term solution. Coverage limits may not be sufficient for high-value Coronado homes, and you'll likely need to purchase additional umbrella or difference-in-conditions coverage to fully protect your property.
How to Get the Best Coverage for Your Coronado Home
Start by working with an independent insurance broker who specializes in coastal California properties. They'll have access to multiple carriers and can help you navigate the current market constraints. Don't assume your current carrier will offer the best rate or coverage—shop around, especially with your policy renewal approaching.
Make sure your dwelling coverage amount accurately reflects your home's replacement cost. With construction costs fluctuating and property values high in Coronado, you don't want to be underinsured. Ask about guaranteed replacement cost coverage, which pays to rebuild your home even if costs exceed your policy limit.
Consider increasing your deductible to lower your premium, but make sure it's an amount you could comfortably pay out of pocket if you needed to file a claim. Review your policy annually and document your belongings with photos or video—it makes the claims process much smoother if you ever need it.
Protecting your Coronado home in today's insurance market takes more effort than it used to, but it's absolutely worth it. Get quotes from multiple sources, understand exactly what's covered and what isn't, and don't skip flood and earthquake coverage just to save money. Your home is likely your biggest investment—make sure it's properly protected.
