Change error highlight color in vs code

Apparently, you can actually change it without using an extension. I created an issue and got the answer that this color is called editor.rangeHighlightBackground and you can override it in your User Settings (settings.json) by:

{
    "workbench.colorCustomizations": {
        "editor.rangeHighlightBackground": "#00AA00"
    }
}

To open User Settings just use Cmd+, on mac or Ctrl+, on windows

Check if you can apply a different theme with VSCode 1.52 (Nov. 2020), considering the new feature:

Error background colors

Theme authors can now leverage new theme colors for errors in the editor.

Edior errors, warnings, and infos can now be styled via:

editorError.background
editorWarning.background
editorInfo.background

A wrapup answer:

For VS Code 1.52+ You can use this snippet to customize error colors:

"workbench.colorCustomizations": {
     "editorError.background": "#ff80ab66",
     "editorError.foreground": "#d50000",
}

Available properties: https://code.visualstudio.com/api/references/theme-color