Mercury Insurance has submitted a new rate filing for its California Homeowners program – one that would mark a significant increase in premiums.
The filing requests an overall average rate increase of 6.9%, reflecting inflationary cost pressures and heightened exposure to catastrophic events such as wildfires, it stated. The impact would vary depending on location. Homeowners in lower-risk areas may see their rates fall, while those in high-risk zones could face steeper increases.
To help offset costs, Mercury plans to expand discounts for policyholders who take proactive steps to reduce wildfire risks. Measures such as clearing vegetation, upgrading vents or using fire-resistant building materials could qualify for savings. Additional discounts will be available to residents in “fire-prepared” communities that enforce collective risk-reduction measures like brush management and home-hardening standards.
These discounts could cut up to a third from the wildfire portion of premiums. For homeowners currently on the FAIR Plan, the changes would also provide broader coverage options, eliminating the need for supplemental “difference in conditions” policies to cover gaps such as water damage, theft, or personal liability.
Meanwhile, it marks the first proposal to use the recently reviewed Verisk Wildfire catastrophe model, which is designed to estimate the potential impact of future catastrophic wildfire events. Approval of the filing would allow Mercury to expand its presence in high-risk areas.
The filing is part of California Insurance Commissioner Ricardo Lara’s Sustainable Insurance strategy, which aims to stabilize the state’s stressed homeowners’ market. Many households in wildfire-prone areas have been left with limited options, often relying on the California FAIR Plan, the insurer of last resort that provides only high-cost, basic coverage.
Mercury said the plan strengthens its ability to insure Californians in distressed regions, offering alternatives to those who have struggled to find comprehensive cover.
“Commissioner Lara’s Sustainable Insurance Strategy will help stabilize the California homeowners’ insurance market,” said Gabriel Tirador, Mercury’s chief executive officer. He added that Mercury’s filing represents the company’s first step toward expanding insurance options and reflects its commitment to the state, where it has operated for more than 60 years.
