California Homeowners Struggle with Rising Insurance Costs and Wildfire Risks
California homeowners are facing a growing crisis as the impacts of climate change intensify. With wildfires becoming more frequent and severe, many insurance companies are pulling out of the state, leaving residents scrambling for coverage.
The recent Los Angeles fires, for example, serve as a stark reminder of the devastation that these events can cause. As a result, insurance companies are increasingly reluctant to provide coverage in high-risk areas. According to a report in The Tribune, this is forcing homeowners to seek alternative insurance options, often at a much higher cost.
Homeowners Speak Out
The Tribune interviewed two homeowners in San Luis Obispo County, Michele Flom and George Hanna, who have experienced firsthand the difficulties of securing affordable home insurance. Both lost their insurance policies in 2024. Flom, in fact, lost her coverage twice. They were then faced with the daunting task of finding more expensive policies.
“I was just shocked,” Hanna stated. These experiences are not unique. The rising cost of coverage is a statewide issue.
Rising Premiums and Shrinking Options
According to the Insurance Information Institute, the average cost of a home insurance premium in California jumped from $1,475 to approximately $1,750 between 2021 and 2024. As major insurance carriers withdraw, homeowners are increasingly turning to non-admitted carriers, which are willing to take on greater risk but charge higher premiums.
Some residents are even forced to rely on the FAIR Plan, a state-run program. While the FAIR Plan provides coverage for homes that other insurers won’t touch, it comes with a hefty price tag and potential for additional costs passed on to policyholders if claims are high.
Protecting Your Home and Coverage
As insurance options narrow, homeowners are under pressure to find and maintain coverage. When a homeowner’s policy is canceled, the consequences can be severe. Home insurance is often a requirement of a mortgage. Failing to obtain replacement coverage can put a homeowner in default on their loan. It also leaves their most significant asset vulnerable to damage.
“We have to have insurance — this is our nest egg,” Flom said, as reported by The Tribune. “This is the only investment that we have, so it was a scramble.”
Fortunately, there are steps that homeowners can take to improve their chances of maintaining coverage and potentially lowering their premiums. These include:
- Fire-Resistant Roof: Installing a Class A fire-resistant roof can significantly reduce fire risk.
- Defensible Space: Clearing a 5-foot-wide zone around your home, removing flammable materials like branches, grass, plants, and mulch.
- Wildfire Prepared Certification: Getting your home certified as “wildfire prepared” by the Insurance Institute for Business and Home Safety.
By taking proactive measures, homeowners can mitigate their risk, protect their investment, and potentially secure their insurance coverage in an increasingly challenging market.
