☆ How to fix the Valley’s home insurance inflation (and make life way more affordable)
Could CA’s skyrocketing costs to insure a home ever, you know, go down? According to United Housing Alliance’s Irene Smith and Manhattan Institute’s Tim Rosenberger, we need: proactive wildfire prevention, local gov’t championing older apartment buildings, + state-level advocacy. An Opp Now exclusive roundup.
Irene Smith, United Housing Alliance president: California’s insurance challenges are driving up housing costs, particularly rental rates, exacerbated by State Farm’s January withdrawal of all apartment insurance coverage.
For example, a triplex previously insured by State Farm for $4,500 annually was rejected by other insurers' coverage due to the property’s age (pre-1950). These multiple rejections force reliance on the California FAIR Plan, which offers limited fire coverage but excludes rental loss and water damage. The base FAIR Plan premium surges to $19,000 annually (excluding full fire/ rental/water protections)—a $14,500 annual increase. Higher insurance costs do not create new housing; they only add to the current cost of rents and housing.
Renters relying on older, more affordable buildings risk losing this housing option as prohibitive insurance expenses take hold under the FAIR Plan’s limited coverage. While the San Jose Housing Department recognizes this new obstacle, solutions are constrained. Local governments must advocate for older apartment buildings and raise awareness of insurance cost impacts at the state level.
Without addressing the impact of escalating insurance costs, a true driver of rising rents will remain completely obscured, further straining housing affordability in San Jose’s rental market.
Tim Rosenberger, Stanford University Center for Entrepreneurial Studies fellow, Manhattan Institute fellow: I see several cost-neutral steps local governments in Silicon Valley can take to improve affordability.
Reducing restrictive zoning and streamlining permitting would increase housing supply without requiring new spending, while cutting unnecessary impact fees and regulations—particularly on housing, childcare, and local services—would lower everyday costs.
Strengthening public safety can reduce crime-related expenses and lower insurance premiums, while proactive wildfire mitigation—such as vegetation management and fire-resilient standards—can make properties more insurable.
Finally, supporting charter schools and easing zoning for educational facilities can create affordable schooling alternatives, saving families money and improving quality of life.
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