Protecting Your Home and Rights After the California Wildfires
The massive LA fires are the latest in an unfolding insurance crisis in Southern California. As more insurance companies withdraw from high-risk areas, thousands of Californians are scrambling for coverage.
Losing fire insurance can put your home, finances, and mortgage at risk. Without adequate coverage, rebuilding after a disaster becomes nearly impossible, and many lenders require active insurance policies to maintain a mortgage.
However, while insurers may claim they are adjusting for increased wildfire risks, that doesn’t mean their actions are always fair or legal. In this guide, we’ll survey the latest damages after the January wildfires, break down why insurance companies are canceling policies, explore steps to find new coverage, and examine how to protect your rights if you believe your cancellation was unjust.
The 2025 Los Angeles Wildfires: Surveying the Damage
At least 29 people were killed, and over 12,000 structures were destroyed by the Los Angeles area wildfires.
The largest fire in the area, the Palisades Fire, which broke out on the morning of Tuesday, January 7, burned more than 23,700 acres. The Eaton Fire began the day after and consumed more than 14,100 acres in northern Los Angeles County. The Hughes Fire, which broke out in northwest L.A. County on Wednesday, January 22, burned over 10,000 acres and prompted warnings and evacuation orders for over 50,000 people.
Additional fires have occurred, including the Sunset Fire on January 8 in the Runyon Canyon area of the Hollywood Hills, the Hurst and Kennedy fires in the San Fernando Valley, and the Woodley Fire, which broke out in a Los Angeles nature reserve.
Estimated Costs of the Wildfire Damages in Los Angeles
An analysis by CoStar estimates that $31 billion in property value was destroyed. However, the total cost of the damages, including business disruption, healthcare, and other economic impacts, is far more significant: a recent estimate by AccuWeather places the total expected damage from the Los Angeles wildfires at between $250 and $275 billion.
How California Insurance Companies Cancelled Homeowners’ Fire Insurance Just Before the 2025 Wildfires
In March of last year, State Farm General, California’s largest home insurer, announced it was nonrenewing more than 30,000 homeowner and condominium policies throughout the state, including more than 1,600 in the Pacific Palisades, according to the LA Times, and more than 2,000 in two other Los Angeles ZIP codes, which include the Brentwood, Calabasas, Hidden Hills, and Monte Nido neighborhoods.
State Farm isn’t the only insurer that has been dropping policies or exiting the state’s market (the insurer announced in 2023 that it wouldn’t be taking on new homeowners insurance customers in the state due to the volume of natural disasters). Allstate stopped writing new policies in California in 2022, and Tokio Marine America Insurance Co. and its subsidiary Trans Pacific Insurance Co. pulled out of the state in 2024. Likewise, Chubb and its subsidiaries stopped writing new policies in 2021 for high-value homes determined to have high wildfire risks.
Other Southern California homeowners have faced steep premium hikes and had to give up their policies. The LA Times reports that last year, one Pacific Palisades homeowner with Farmers Insurance was told his homeowners’ insurance premium would jump from $4,500 to $18,000 annually.
California’s Fire Insurance Crisis
California’s fire insurance crisis has been primarily driven by the increasing frequency, size, and severity of wildfires. The state has experienced some of the most destructive wildfires in U.S. history, including the 2017 wine country fires, the 2018 Camp Fire (which destroyed the town of Paradise and caused over $16 billion in damages), and the 2020 wildfire season, which saw what till then had been five of the six largest fires in state history. These catastrophic events led to unprecedented losses, prompting major players in the insurance industry to reassess their exposure in high-risk areas.
In recent years, one of the biggest debates in the state’s insurance market has revolved around whether insurers should be allowed to use forward-looking climate models to set their rates.
California’s insurance regulations—among the strictest in the country—require insurers to base their pricing primarily on historical loss data. This means insurers can only use past wildfire losses to justify rate increases.
However, as climate change accelerates, insurers argue that past losses do not accurately reflect future wildfire risks. Rising temperatures, prolonged droughts, and more extreme weather patterns are expected to worsen these risks.
Insurance industry experts contend that predictive catastrophe models—which assess wildfire risk based on vegetation density, temperature trends, wind patterns, and human development—would allow companies to price policies more accurately. They argue this would create a more stable insurance market, ensuring companies can remain financially solvent while continuing to provide insurance coverage in wildfire-prone areas.
Consumer advocates and regulators, however, including the CDI, have opposed allowing climate models, citing concerns about fairness, transparency, and affordability. They argue that many of these models are proprietary, meaning they’re developed and controlled by private companies with little regulatory oversight. If insurers rely on black-box models to justify rate hikes, it could become nearly impossible for regulators—or homeowners—to verify whether the increases are reasonable or based on accurate data.
There’s also concern that insurers could use these models to inflate prices beyond what is necessary to cover legitimate wildfire risks. This would lead to drastic premium increases, particularly in rural and high-risk areas. Homeowners could see their rates skyrocket—or, worse, lose access to coverage altogether.
Critics also question the accuracy and fairness of predictive modeling at the individual property level. While climate models can provide valuable insights into regional trends, they’re not always precise enough to determine wildfire risks for specific homes. This could lead to situations where homeowners who have taken significant fire mitigation measures—such as installing fire-resistant roofing, clearing defensible space, or upgrading windows and vents—are still charged exorbitant premiums because their property falls within a broad risk zone.
California Issues 1-Year Moratorium on Insurance Cancellations in Fire Areas
California’s Insurance Commissioner Ricardo Lara has announced a one-year pause on home insurance policy cancellations and non-renewals for people whose properties are in or near the wildfires that struck Los Angeles County this January.
This means that for a year after the official emergency declaration, insurance companies can’t cancel your existing homeowners’ insurance, including fire coverage, or refuse to renew it simply because your home is in a fire-affected area. This protection is automatic for eligible homeowners; you don’t have to do anything to activate it.
The Commissioner also suggested a six-month hold on any pending non-renewals or cancellations issued shortly before the fires, and he encouraged insurers to be flexible with premium payments by extending grace periods. It’s important to understand that this moratorium doesn’t mean your insurance rates won’t eventually go up, but it does offer a crucial period of protection and allow homeowners to focus on recovery without the immediate threat of losing their coverage.
Areas Affected by the Moratorium
Check whether your zip code is included in the one-year moratorium at this website run by the CDI. If you have other questions about how the moratorium could affect your insurance coverage, contact the California Department of Insurance at 800-927-4357.
How to Purchase Fire Insurance
If you want to purchase or find a new home insurance policy, this guide will help you navigate the market.
1. First, understand your needs.
California’s wildfire risk varies significantly by location. Check your property’s wildfire hazard score using resources like Cal Fire’s Fire Hazard Severity Zones map. This will help you understand the level of coverage you might need. Also, consider your home’s age, construction materials, and proximity to vegetation. These factors influence your insurance premiums and coverage options. You should also create a detailed list of your possessions. This will be crucial when determining coverage limits and filing a claim in case of a fire.
2. Explore your insurance options.
Start by contacting major insurance providers. They might offer comprehensive homeowners insurance policies that include fire coverage. However, in high-risk areas, finding traditional coverage can be challenging. If you can’t find coverage in the traditional market, consider using the California FAIR Plan. It provides basic fire insurance as a last resort. It might not offer the same level of coverage as a standard policy, so if you opt for the FAIR Plan, consider adding a Difference In Coverage (DIC) policy. This can supplement the FAIR Plan’s coverage and provide more comprehensive protection. You might also want to explore surplus lines insurance—a specialized type of insurance for risks that traditional insurers won’t cover.
3. Shop around and compare.
Get quotes from multiple insurers. Don’t settle for the first quote you receive. Compare policies from different companies to find the best coverage and price. Working with an insurance broker can help you access a broader range of insurance options, including those from smaller companies and surplus line insurers. They can help you find the right policy for your needs. Whoever you work with, pay close attention to coverage limits, deductibles, exclusions, and endorsements. Make sure you understand what is and isn’t covered by the policy.
The California FAIR Plan
Property owners who cannot obtain insurance elsewhere can turn to the California FAIR Plan, a state-mandated insurer of last resort that offers basic coverage for properties deemed too high risk by private insurers.
California’s FAIR Plan has received much recent attention as private insurers have canceled plans or left the market. Over the last four years, the number of dwelling policies has more than doubled from 202,897 to 451,799 statewide policies. The total exposure for those policies is $458 billion, almost triple what it was in 2020.
As new disasters strike and these dollar amounts add up, there has been growing concern about the FAIR Plan’s solvency. However, as Chip Merlin noted in this recent blog post, the FAIR Plan, unlike private insurers, is a public-oriented institution with built-in safeguards to ensure continuity of coverage. Even if its current treasury is stretched thin by wildfire claims, it has a statutory authority to assess every admitted insurance carrier in California for additional funds to cover shortfalls. This mechanism ensures strong liquidity in the event of a disaster.
What the CA Fair Plan Covers
FAIR Plan policies provide less coverage than standard market insurance: they typically only cover specifically named perils, such as fire, smoke, lightning, and internal explosions, with options to purchase additional endorsements for windstorms, hail, or vandalism. The standard FAIR Plan homeowners policy doesn’t cover water damage or theft, it doesn’t provide liability insurance, and it only insures properties at actual cash value.
What the CA Fair Plan Costs
The average annual policy cost for the California FAIR Plan was around $3,200 in 2022, according to a statement made by a spokesman for the organization at the time. The average policy cost has likely increased since then, however, and customers insured under the FAIR plan were expected to see rates increase by more than 15% on average over the course of 2024.
Turn to Merlin Law to Make Sure You’re Protected
Are you fighting an insurance company that won’t pay up on claims? With nearly 40 years of practice and $2 billion in recovered claims, our team stands by your side to ensure you can confidently face any insurance challenge.
Contact us today for a consultation, or read more about how we’re your trusted advocate.
FAQs About Fire Insurance in California
What Should I Do If My Fire Insurance Is Canceled?
If your fire insurance is canceled, don’t panic—take these immediate steps to protect your home and financial security. First, contact your insurance provider to understand the reason for cancellation. Sometimes, you can reinstate your policy by addressing their concerns, such as reducing fire risks or improving your property’s safety features. Next, shop for alternative coverage with other insurers, including surplus lines carriers or the California FAIR Plan, which offers last-resort fire insurance for high-risk properties. Taking quick action can help you secure coverage before a lapse, avoiding gaps that leave you vulnerable.
Can an Insurance Company Cancel My Fire Insurance After a Claim?
Yes, an insurance company can cancel your fire insurance after a claim, but they must follow specific legal guidelines. In California, insurers are generally prohibited from canceling or refusing to renew a homeowner’s policy for at least one year after a total loss caused by a declared wildfire emergency. However, outside of this protection period, insurers may reassess their risk and decide to cancel or non-renew your policy based on repeated claims, increased wildfire risk, or failure to meet policy requirements.
You have legal options if your policy is canceled unfairly or without proper notice. Consulting a property insurance attorney can help you challenge an improper cancellation and explore alternative coverage solutions to protect your home.
Can I Get Fire Insurance If My Previous Policy Was Canceled?
You can still get fire insurance even if your previous policy was canceled, but your options may be more limited. Traditional insurers might hesitate to offer coverage if your policy was canceled due to non-payment, a high-risk location, or previous claims. However, alternative options exist, such as surplus lines insurers or the California FAIR Plan. Mitigating fire risks by installing fire-resistant materials or clearing defensible space can also help you get a new policy for a private insurer.
What Are the Most Common Reasons for Fire Insurance Cancellation?
Fire insurance policies can be canceled for several reasons, often tied to increased risk or policyholder issues. One of the most common reasons is the property’s location—if it’s in a high-risk wildfire area, insurers may deem it too costly to cover. Even for minor losses, frequent claims can also trigger cancellation, as insurers may view the property as a high liability. Insurers might point to overgrown vegetation or outdated electrical systems as reasons for non-renewal. In some cases, such as the ones mentioned above at the start of this blog, insurance companies simply decide to reduce their exposure in certain areas, leading to widespread policy cancellations.
