The recent bailout of the California FAIR plan underscores the growing instability within the state’s home insurance market. Over the past several years, the escalating effects of climate change, including intensified droughts and extremely dry vegetation, have contributed to increasingly devastating wildfires. These fires have caused significant damage in cities and towns throughout California, leading to substantial financial losses for insurance firms.
State Farm, the largest insurance provider in California, has started to withdraw from regions at high risk for wildfires. In the previous year, the company chose not to renew close to 70 percent of its policies within the Palisades zip code. This shift has forced residents to rely more heavily on the FAIR plan, an insurance program of last resort.
