Mercury Insurance highlighted on May 29, 2025, the significant issue of underinsurance in California, noting that 10.5% of the state's nearly eight million residences are completely uninsured, with many more being underinsured.
The company emphasized that rising construction costs, increased wildfire risk, and market adjustments contribute to this complex landscape, making it crucial for homeowners to regularly review their coverage with an agent.
Mercury also pointed to regulatory constraints, such as Proposition 103, which requires rates to be based on historical losses, creating challenges for insurers to adjust rates for evolving risks. This has led more homeowners to rely on the California FAIR Plan, which provides basic fire insurance.
Despite these challenges, Mercury acknowledged the California Department of Insurance's 'Sustainable Insurance Strategy' as a positive step towards modernizing the market and expanding coverage options for homeowners, supporting more accurate pricing in wildfire-prone areas.
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