Sacramento isn't just California's capital—it's a case study in how insurance markets are responding to climate change, natural disasters, and decades-old regulations. If you live here, you've probably noticed your homeowners insurance premium creeping up year after year. Maybe your insurer dropped you entirely. You're not imagining it, and you're definitely not alone.
Between 2019 and 2025, Sacramento homeowners saw premiums jump 54%—one of the steepest increases in the nation outside of Florida's hurricane zones. At the same time, income only rose 24%, creating a real affordability squeeze. This guide will help you understand why this is happening, what coverage you actually need, and how to navigate a challenging insurance landscape that's forcing many residents onto the state's insurer of last resort.
Auto Insurance: New Minimums You Need to Know
Here's something that changed on January 1, 2025, and it affects every driver in California: the minimum auto insurance requirements doubled. For 57 years—since 1967—California required just 15/30/5 in liability coverage. That's $15,000 per person for bodily injury, $30,000 total per accident, and a measly $5,000 for property damage. Those numbers hadn't kept pace with inflation or modern vehicle repair costs.
Now the minimums are 30/60/15. That's $30,000 per person, $60,000 per accident for injuries, and $15,000 for property damage. Your insurer should have automatically updated your policy at renewal, but it's worth checking. The catch? Higher minimums mean slightly higher premiums—the average increase is modest, but it varies by driver. The good news is that the new limits take effect at renewal, so existing policies weren't immediately affected.
But here's the real talk: even the new minimums might not be enough. One serious accident where you're at fault—especially if multiple people are injured—can easily blow past $60,000 in medical bills. If you have assets to protect (a house, savings, retirement accounts), consider liability limits of 100/300/100 or higher. Better yet, look into an umbrella policy that adds another layer of protection beyond your auto and home coverage.
Homeowners Insurance: Navigating a Challenging Market
Sacramento's homeowners insurance market is under serious stress. Premiums have risen an average of $648 since 2019, and many national carriers have either stopped writing new policies or non-renewed existing customers. State Farm alone dropped around 70,000 policies statewide in 2024, sending many homeowners scrambling for coverage.
Why the exodus? A few reasons. California's wildfires have become more frequent and destructive, even affecting areas that historically felt safe. Sacramento sits in a region where wildfire smoke is increasingly common, and some surrounding areas face direct fire risk. Rising construction costs mean rebuilding a home costs far more than it did even five years ago. And California's Proposition 103—passed in 1988—has traditionally limited how insurers can set rates, preventing them from using forward-looking catastrophe models.
That's changing. In 2024, Insurance Commissioner Ricardo Lara implemented major reforms allowing insurers to use catastrophe modeling that accounts for climate risk. In exchange, insurers must increase coverage in high-risk areas, eventually reaching 85% of their statewide market share in wildfire-distressed zones. The goal is to stabilize the market and bring carriers back.
If you're having trouble finding coverage, you're not alone. Sacramento County saw FAIR Plan policies more than double in just one year. The California FAIR Plan is the state's insurer of last resort—it provides basic fire coverage when no private insurer will. But it's more expensive, offers limited coverage (up to $3 million for residential properties), and doesn't cover theft, liability, or many other perils that standard homeowners policies include. You'll likely need to purchase a separate difference-in-conditions policy to fill those gaps.
Earthquake Coverage: Don't Skip It
Here's something that surprises a lot of people: standard homeowners policies in California don't cover earthquake damage. At all. If the Big One hits and your house is damaged, you're on your own unless you have a separate earthquake policy.
Most Californians get earthquake coverage through the California Earthquake Authority (CEA), a publicly managed, privately funded entity that provides about two-thirds of all residential earthquake policies in the state. As of 2025, CEA rates increased by 6.8%, adding an average of $70 per year for homeowners (less than $10 for renters). While that might sound like a lot for something that might never happen, consider the alternative: complete financial devastation if it does.
CEA policies come with high deductibles—typically 10% to 25% of your dwelling coverage—which means you'll pay a significant chunk out of pocket before coverage kicks in. But they also include building code upgrade coverage (starting at $10,000) and loss of use coverage if your home is uninhabitable. If you have an older home that's been properly retrofitted with foundation bolting or cripple wall bracing, you may qualify for up to 25% off your premium.
Flood Insurance: Living Where Rivers Meet
Sacramento sits at the confluence of the American and Sacramento Rivers, which means flood risk is a real concern for many neighborhoods. Like earthquakes, floods aren't covered by standard homeowners insurance. You need a separate flood policy, typically through the National Flood Insurance Program (NFIP).
Even if you're not in a high-risk flood zone, consider getting coverage anyway. The American River Flood Control District recommends that anyone living behind levees maintain flood insurance. Properties outside the 100-year floodplain can often qualify for a low-cost Preferred Risk Policy. Remember: there's a 30-day waiting period for new flood policies, so don't wait until storms are forecast to buy coverage.
What You Can Do Right Now
The Sacramento insurance market is challenging, but you're not powerless. Start by reviewing your current auto policy to confirm it meets the new 30/60/15 minimums—and consider whether you need higher limits. Shop around for homeowners coverage, even if your current insurer hasn't dropped you; premiums vary widely between carriers. If you're stuck on the FAIR Plan, work with an independent agent who can help you layer on the additional coverage you need.
Don't ignore earthquake and flood coverage just because they cost extra. These aren't hypothetical risks in Sacramento—they're real vulnerabilities that could wipe out your largest financial asset. Yes, earthquake deductibles are high and flood insurance adds to your monthly expenses. But compare that to the cost of rebuilding your home out of pocket.
Finally, consider home improvements that can reduce your premiums. Upgrading outdated electrical wiring, plumbing, or roofing not only makes your home safer—it can make you insurable again if carriers have rejected you. Earthquake retrofitting for older homes can slash your CEA premium by up to 25%. Hardening your property against wildfire through the Safer from Wildfires program can reduce your FAIR Plan costs.
The good news? California's 2024 insurance reforms are starting to bring carriers back to the market. The bad news? It will take time, and premiums probably aren't going down anytime soon. In the meantime, work with a knowledgeable independent insurance agent who understands Sacramento's unique risks and can help you piece together the coverage you need at the best available price.
