Additional Coverage:
- Victims of the Pacific Palisades fire face another harsh reality: no insurance to rebuild (newsbreak.com)
Insurance Crisis in California after Wildfires
Before this week’s devastating wildfires, California faced an insurance crisis. Insurance companies have been leaving the state due to the high cost of natural disasters, including wildfires.
The wildfires have destroyed thousands of homes and killed at least five people. Many victims will face financial hardship as they try to rebuild without adequate insurance coverage.
Insurance companies are raising rates and cutting coverage to protect their profits. Last year, State Farm dropped 30,000 policies, including many in neighborhoods hit by this week’s fires.
California’s Department of Insurance (CDI) reports that seven major insurers have reduced coverage since 2022. The state is now requiring insurers to cover more homes in disaster-prone areas but allowing them to pass the cost to consumers.
Some Californians are turning to the FAIR Plan, a state-backed insurance program for those who can’t find private coverage. However, the FAIR Plan is facing insolvency risks.
Many homeowners may have to pay for rebuilding costs out of pocket, which could be unaffordable for many.
Climate Change and Insurance
The California wildfires and insurance crisis highlight the risks of climate change for other states. Florida, Louisiana, and Texas are also facing increased non-renewal rates and higher premiums.
A Congressional report warns that climate change could lead to a collapse in property values and a financial crisis.