Before the Eaton Fire ravaged their street in northwest Altadena, California, Louise Hamlin and Chris Wilson lived side-by-side in nearly identical homes. “I chose an old home in an old neighborhood because it has soul,” said Hamlin, a 51-year-old single mother who purchased her 1,500-square-foot home a decade ago. Today, the charming English-style cottages, built in 1925 with welcoming porches and Palladian windows, are gone. The historic neighborhood is now little more than rubble and ash.
Since the wildfire destroyed their homes, Hamlin and Wilson have been navigating the complexities of surviving a natural disaster. Their experiences, however, tell contrasting stories, illustrating the nation’s escalating home insurance crisis. Hamlin’s insurance has already paid nearly a million dollars, and she is actively searching for contractors. In contrast, Wilson is considering loans, potential lawsuits, and the possibility of relocating his family out of California. “It changes the whole trajectory of your life,” said Wilson, 44, who bought his house five years ago with his wife, who is six months pregnant with their first child.
Louise Hamlin and Chris Wilson, neighbors whose homes were destroyed by the Eaton Fire, face different paths to recovery.
‘The Unfair Plan’
Hamlin’s home was insured by Mercury Insurance, while Wilson was relegated to the California Fair Access to Insurance Requirements Plan – the state’s minimal insurance program – after SafeCo declined to renew his policy last May. The FAIR Plan provides insurance to those who cannot secure private coverage but require it as a condition of their mortgage.
As natural disasters like wildfires and hurricanes become more frequent due to climate change, many property owners are struggling to find or afford private insurance. This issue is particularly acute in California, where some major insurance companies have either ceased writing new policies or are refusing to renew existing ones. State officials recently initiated new regulations to incentivize insurers to remain in California. The goal is to move as many homeowners as possible away from the FAIR Plan. Designed as a temporary safety net, FAIR, with its high premiums and basic coverage, was intended to help policyholders until they could find a more permanent option. Yet, the number of FAIR Plan residential policies more than doubled between 2020 and 2024, reaching almost 452,000 policies last year.
An aerial view shows the extent of the damage to the homes of Louise Hamlin and Chris Wilson.
For Wilson and Hamlin, their parallel rebuilding journeys offer a cautionary tale. Wilson paid nearly 60% more in premiums related to the fire than Hamlin did, but for less than half the coverage.
“That’s why a lot of people call it ‘The Unfair Plan,'” noted Amy Bach, executive director of the consumer advocacy group United Policyholders.
SafeCo’s parent company, Liberty Mutual, released a statement acknowledging “difficult but purposeful business decisions” in California but could not comment on individual policies. Mercury did not respond to requests for comment. Janet Ruiz, spokesperson for the Insurance Information Institute, representing many major insurance companies, noted that California is fortunate to have the FAIR Plan, especially since it is required to accept everyone. Ruiz added that the outcomes would be worse if homeowners had no coverage at all. Insurance Commissioner Ricardo Lara stated that California is working to ensure all claims are paid. He also mentioned that his office is working to help homeowners transition from the FAIR Plan back to more comprehensive insurance coverage. A FAIR Plan spokesperson declined to comment on Wilson’s case, stating it’s difficult to compare the different policies and their coverage.
Chris Wilson standing at the steps of his former home after the fire.
31,000 Wildfire Claims
Thousands of people lost their homes in the Eaton and nearby Palisades fires, which rank among the most destructive in California’s history. The FAIR Plan has expanded staffing to meet the rising demand, and it has a funding mechanism designed to pay all covered claims. State data shows over 31,000 wildfire-related claims had been filed as of last week, including approximately 4,400 under the FAIR Plan.
Hamlin had standard comprehensive home insurance with an annual policy premium of $1,264 prior to the fire. Her policy offers up to $1.5 million to rebuild her home, other structures, and for personal property replacement, including up to $303,000 for living expenses while displaced. Her policy also provides additional coverage that could add more than $200,000 to her rebuilding efforts.
Chris Wilson surveys the damage to his home after the fire.
Wilson, on the other hand, pays a $2,000 premium for the FAIR Plan, which sets his maximum payout at $686,000, including $100,000 for living expenses. Wilson also purchased “wrap-around insurance” for $1,500 per year to cover issues that the FAIR Plan doesn’t, such as burst pipes. However, that supplemental plan doesn’t cover fire damage.
Hamlin indicated that Mercury’s support has been exceptional, immediately providing her with funds and assisting with the next steps, including finding housing and obtaining contractor quotes. Within days, the company wired her tens of thousands of dollars to begin the process. “Being able to rest at night and wake up and deal with everything else is really important,” Hamlin said.
Wilson, meanwhile, has struggled to even speak to a FAIR Plan representative. There was no communication for the initial two weeks; the contact information listed was incorrect, the phone numbers had no voicemail, and emails bounced back. “Half the time, I feel like I’m doing something wrong,” Wilson reflected. After The Associated Press reached out for comment, Insurance Department spokesperson Michael Soller said a representative would contact Wilson directly.
The remnants of the street address on Chris Wilson’s home after the fire.
‘It’s just luck, really’
Wilson said he is haunted by his choices. He had believed he bought property in a low-risk area and had avoided looking for homes in a neighborhood further north after hearing that homeowners there had been dropped by their insurers.
Hamlin was also aware of fire risks when she moved in. She previously lived in Pasadena and was surprised that State Farm, her then-insurance company, would not offer her coverage in Altadena. She chose Mercury because it was the most affordable option and was considering even more extensive coverage. “I could have been dropped when Chris was dropped. Any of us could be at any time. It’s just luck, really. It’s nothing I did or didn’t do,” Hamlin said, stunned by the comparison. “I had the same risk factors as everyone else.”
Stephen Collier, a professor of urban planning at the University of California, Berkeley, stated that the seemingly random nature of who gets dropped and when is substantially related to insurance companies’ complex risk models. “They’re all trying to manage their exposure,” Collier said. “If you think about wildfires, you don’t want concentrated exposure.”
Wilson said SafeCo requested an inspection of his property before deciding not to renew his policy. Panicked, he attempted to negotiate with them, offering to clear brushes, trim trees near the roof, and undertake other fire mitigation efforts, all to no avail. He aggressively sought other options with his insurance agent, but without success. He then resigned himself to the FAIR Plan, assuming he would eventually find private insurance again.
There was another complication: Wilson said he was unable to obtain comprehensive replacement cost coverage through the FAIR Plan because his roof was too old. He ended up with coverage based on “actual cash value,” which significantly limited the payout based on the depreciation of the lost property.
“We’re talking hundreds of thousands of dollars and that’s very, very painful,” said Bach of United Policyholders.
Louise Hamlin surveying the remains of her home after the fire.
An Uninsurable Future
Citing rising fire risks and other issues, seven of the top 12 insurance companies either paused or restricted new business in California in 2023. State regulations allow insurers more flexibility to increase premiums in exchange for issuing policies in high-risk areas, including the consideration of climate change in premiums and passing the costs of reinsurance to consumers. But those are, according to Dave Jones, California’s insurance commissioner from 2011 to 2018, only short-term solutions. He pointed to Florida, where officials have “done everything the insurers asked California to do” but yielded little success.
“We’re marching steadily towards an uninsurable future in the United States because we’re not doing enough fast enough to address the underlying cause, which is climate change,” Jones stated.
Unless governments shoulder the financial burden of serious mitigation efforts, the cost of California’s fire risk will remain unevenly distributed and ultimately fall on the homeowners, according to Collier of UC Berkeley. That could mean the underinsured—like Wilson—absorbing their personal losses, all California homeowners collectively facing increased premiums, or both. State Farm, California’s largest insurer, this week urged the state to approve an emergency rate hike of 22% for homeowner policies starting in May after processing nearly 8,700 claims and paying out more than $1 billion to policyholders impacted by the LA fires.
“There’s a huge amount of risk in the system and there’s a big question of who is going to pay for this,” Collier noted.
Wilson expects he’ll need to take out loans to rebuild. He is considering joining a lawsuit against Southern California Edison, alleging the utility’s equipment sparked the blaze, in the hope of receiving settlement money. But with a baby on the way, Wilson said he can’t imagine living in limbo on the FAIR Plan forever. He is considering leaving California if private insurance remains unattainable. “I don’t want to have to be prepared to maybe lose everything again,” Wilson shared. “Stuck paying for an insurance that doesn’t cover anything. You don’t want to live in a risky area. You don’t have the safety net.”
