California’s increasing wildfire threat has led insurance companies to stop renewing policies in high-risk areas, creating a crisis for homeowners. Between 2020 and 2022, 2.8 million homeowner policies were either canceled or not renewed, including in Los Angeles County. As a result, many homeowners are either going without fire insurance or turning to more expensive state programs with higher premiums and less coverage.
In response, California’s Insurance Commissioner Ricardo Lara recently introduced new regulations aimed at encouraging private insurers to offer policies in fire-prone areas. However, these changes may lead to even higher insurance premiums, as insurers can now factor in the cost of reinsurance into their rates. While these measures aim to stabilize the market, the burden will likely fall on homeowners who will face significantly higher costs. The California FAIR Plan, a state-backed insurance program, has seen a surge in demand, and its policies have become more expensive.
