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Los Angeles Fires Cancelled Insurance Policies: What Does it Mean for Residents Now? | Eva Zheng

Writer's picture: CCA Pulse MagazineCCA Pulse Magazine

Updated: Feb 4




On Jan. 7, fires raged through Los Angeles, fueled by powerful winds and near-record dry conditions in Southern California, resulting in 28 confirmed fatalities. CalFire confirmed 5,000 destroyed structures from the Pacific Palisades Fire alone, amplifying concerns about the financial vulnerabilities of living in wildfire-prone areas. Just months before this disaster, major insurance companies refused policy renewals and canceled coverages due to the increasing risk of wildfires.


Homeowners impacted by these changes face difficulties securing coverage, with some turning to the California Fair Access to Insurance Requirements plan (FAIR), a private pool created by the state for fire damage. However, the FAIR plan offers limited protection and requires expensive supplemental policies. The rising costs and challenges of securing affordable insurance reduce property values in Southern California, reducing market values and making it increasingly difficult for residents to sell homes in high-risk areas.


State Farm, one of the largest insurers in California, canceled hundreds of homeowner’s policies last summer because of increased financial risks posed by wildfires and to avoid “financial failure.” As the Santa Ana winds continue to fuel destructive fires across Southern California, many residents now face premiums that have tripled in price. Some have no choice but to go uninsured and bear the costs. Fewer private insurers willing to take on the risk, declining property values, and fewer people able to afford homes impact the local economy, making it more difficult for residents to maintain their homes or move into the area.


Although FAIR is required to offer fire damage coverage to all eligible homeowners because it is a state-mandated insurance pool, it has its limitations. The plan excludes coverage for risks like theft, water damage, and liability. To fill these gaps, many homeowners need to purchase supplemental policies. FAIR’s premiums are expensive because it is designed to cover high-risk properties, and for some, this may still be unaffordable. The plan has already reported a combined exposure of approximately $4.8 billion from the Pacific Palisades and Eaton fires alone. As more homeowners turn to FAIR, the growing number of claims could lead to even higher premiums or further limitations on coverage.

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