California's property insurance market is going through its most significant restructuring in 15 years — and short-term rental operators feel it first and hardest. Two major carriers pulled back from new STR policies in the last 60 days. Premiums on existing policies are up 18-32% year-over-year. Here's what's actually happening and what to do.
What's driving it
- Wildfire exposure. The 2020-2024 fire seasons produced losses that carrier actuaries are still pricing in. Hillside and wildland-urban interface properties are bearing the brunt.
- Commercial classification pressure. Insurers increasingly classify regular STR operation as commercial, not personal, use. Your homeowner's policy may not cover you. The gap insurance products that existed five years ago are getting more expensive and harder to find.
- Reinsurance markets globally. California carriers rely on reinsurance to spread risk. Global reinsurance has hardened, and California climate risk is a premium loss pool.
What's still available
- STR-specific carriers (Proper Insurance, Safely, Steadily, CBIZ) continue to write in California. Premiums are higher than general carriers, but coverage is broader and better-aligned with how STRs actually operate.
- Airbnb AirCover and Vrbo Liability continue to cover damage and liability to a point. They are not a substitute for a standalone policy — claims can be inconsistent, exclusions exist, and coverage sunsets if you stop booking on that platform.
- Commercial umbrella policies that sit over a primary STR or homeowner policy, for a few hundred to a few thousand dollars a year, are worth looking at for properties above $1.5M value.
What to do this week
- Pull out your current policy declarations page. If the word "short-term rental" isn't in it, call your agent today. A claim filed under an inapplicable policy can be denied.
- Ask your agent specifically about commercial classification. The answer varies by carrier. Put the answer in writing.
- Get a quote from an STR-specific carrier. Even if you don't switch, you'll understand what the market is pricing your risk at.
- Review your Airbnb host protection settings. Make sure the basics are active — security deposit, damage protection, cancellation policy aligned with your claim-tolerance level.
The underrated risk
The biggest gap we see isn't liability — it's loss-of-income. If your property is uninhabitable for 60-90 days after a claim, most STR-specific policies cover the foregone rental income. Most homeowner policies do not, or cover it at a fraction of market rate.
