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Burning closer to an ‘uninsurable future’
Thousands of L.A. County residents are returning to the burned remnants of their homes — if they’re allowed back yet — and trying to figure out what happens next.
The historic devastation arrived after many insurance companies announced they were retreating from the Golden State, citing in part the increasing risk of devastating wildfires. Many homeowners in Pacific Palisades were dropped by providers in recent months and left with no option but to pay much higher premiums with minimal coverage under the state’s insurer of last resort.
A Christmas wreath remains at a home in Pacific Palisades that burned in the fire on Jan. 11, 2025. (Christina House / Los Angeles Times)
For Dave Jones, director of UC Berkeley’s Climate Risk Initiative and the state’s former insurance commissioner, L.A. County fires tragically provide “more evidence that we are continuing to march towards an uninsurable future, because we’re not doing enough, fast enough to transition from fossil fuels and other greenhouse gas emitting industries.”
I interviewed him to get a sense of what affected homeowners should expect as they begin the recovery process — and the potential effects of the overall insurance market.
“I still believe insurance is the canary in the coal mine for the climate crisis,” he said. “And the canary is just about dead.”
Here are some takeaways from our conversation.
The road to recovery will be painful, confusing and riddled with fraudsters.
Although California’s Department of Insurance has announced steps to speed things up, “it is going to be a painful, long and frustrating process,” Jones said, sharing this advice:
Review your policy to understand the full extent of your coverage. Many policies include an additional living expense provision designed to help with out-of-pocket expenses fire victims face, like the cost of a motel stay, food and replacement clothing and other personal items.
Beware of fraudsters looking to take advantage of the crisis. As the ash settles in the coming weeks, bad actors will make their way to scorched neighborhoods, offering deals that may sound like a godsend during a traumatic time.
Public insurance adjusters may start reaching out to affected homeowners offering help through the cumbersome claims process and promising to get them the most money possible. “They charge a fee and you may not need their help,” Jones said, advising affected homeowners to file their claims directly with their insurance company as soon as possible.
Adjusters have to be licensed by the state, so homeowners can check whether they’re legitimate and in good standing. More tips and resources to avoid getting scammed are available on the state insurance department’s website.
Mexican national guardsmen help search for remains in the rubble of a beachfront home in Malibu on Pacific Coast Highway on Jan. 14, 2025. (Brian van der Brug / Los Angeles Times)
Debris cleanup can be hazardous and open homeowners up to liability. Jones said counties typically launch their own debris removal programs in an effort to safely dispose of hazardous debris “as opposed to having every homeowner hiring some waste haulage company, which also could be fly-by-night.”
If those contractors don’t dispose of that material properly and it ends up polluting the environment, the homeowner who hired them could face consequences.
On Tuesday, Gov. Gavin Newsom’s office announced that federal and state debris removal teams were in affected areas and would start the first round of clearing “as soon as it’s safe to do.”
Everyone’s premiums — not just those affected by fires — are likely to increase.
That was already expected to happen, due to sweeping new regulations that went into effect just days before the fires started.
But the catastrophic loss and historic insurance payouts expected in the coming months and years from these fires will probably raise rates even further, Jones explained.
A firefighter holds a ladder as crews try to quell flames at the Virginia Pines apartment complex during the Eaton fire. (Robert Gauthier / Los Angeles Times)
There’s a separate scenario that could hit the wallets of Californians with home insurance policies.
“The FAIR Plan has seen its policies grow from a little over 200,000 in September 2020 to more than 450,000 as of last September,” The Times’ Laurence Darmiento reported recently. “That has roughly tripled its loss exposure to $458 billion over the same period. Pacific Palisades has one of the state’s highest concentrations of FAIR Plan policyholders, with the insurer estimating its exposure in the neighborhood at $5.89 billion.”
If the FAIR Plan blows through its reserves and reinsurance paying out the substantial claims many homeowners are now filing, Jones explained, everyone else may be on the hook.
“In addition to substantial rate increases for insurance in California, people with private insurance could end up seeing an assessment to cover the FAIR Plan losses,” he said.
There are steps the government could take to alleviate this insurance crisis.
Jones outlined a few paths for state and federal leaders:
Shore up the FAIR Plan with federal support. Jones suggests “a federal program of nonprofit reinsurance for FAIR plans,” that could substantially reduce costs. Those cost reductions could then be passed on to FAIR Plan policies.
Create a state or federal subsidy for low-income households on the FAIR Plan. Jones said this should be done without suppressing the plan’s current rates. “We still want that rate to reflect the risk and send the signal that we ought to reconsider sprawling into these high wildfire risk areas,” he said. “But for low-income households, a federal premium subsidy program or state premium subsidy program to help people afford the FAIR Plan would be important.”
Make insurers factor fire mitigation efforts into rates. Right now, companies are not obligated to do that, Jones noted, despite any personal measures or government programs that increase the likelihood homes will survive a blaze.
“That’s hugely frustrating,” he said. “You can be a homeowner and spend thousands or tens of thousands of dollars [to create] defensible space, you’re paying all these taxes, you can be proximate to a big land management program … and you get no credit for it — and they non-renew you.”
Recent state bills aimed at changing that have died in the Legislature.
Jones acknowledged the outrage is likely to boil over in California as policyholders see their premiums hiked — and potentially get a separate bill to cover an insurance plan they don’t have.
“But the industry they should be angry at most of all is the oil and gas industry, who lied and misled and deceived the public for decades about climate change and their contribution to it,” he said. “I hope that will result in more tools for private individuals to bring lawsuits against the oil majors for the damage they suffer.”
The Times has more guides to help fire victims understand the recovery process:
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