How Will the Los Angeles Wildfires Affect the Home Insurance Market?

Natural disasters in many parts of the U.S. have increased over the past few years, and the devastating wildfires in Los Angeles this week have many wondering about the long-term effects on the home insurance market. The Pacific Palisades neighborhood, where the fires began, will likely encounter challenges rebuilding, according to Fast Company. The wildfire that began there earlier this week has already been named the most destructive in the modern history of Los Angeles, destroying numerous homes throughout the city. Of the 72,000 California homes that State Farm discontinued insurance coverage for last year, nearly 70% were located in Pacific Palisades.

California has seen other major insurers pull back on property coverage in the nation’s most populous state as climate change makes wildfires, floods, and windstorms more common and damaging.

Of the top 20 most destructive wildfires in state history, at least 15 occurred since 2015. The data did not include the Los Angeles area fires this week.

In 2023, seven of the 12 largest insurance companies by market share in California either paused or restricted issuing new policies in the state.That has made it extremely difficult for homeowners in high-risk areas to obtain or afford insurance. Read more