People in California who lost their homes to the wildfires of early 2025 have been struggling ever since to make ends meet, and their insufficient insurance is a big reason why.
For homes in high-risk areas, many insurance companies dropped their coverage just in time for the devastating L.A. fires to sweep through and destroy everything in their path.
What's happening?
According to The New York Times, "Thousands of Californians affected by the fires … say a broken insurance market is hampering their ability to rebuild their lives."
With the worry of insuring homes like those burned down last year, insurance giants such as State Farm stopped insuring properties they deemed not worth the risk.
As a result, many who were originally under their insurance plans were instead left with the FAIR (Fair Access to Insurance Requirements) plan — a last-resort state fire insurer.
However, the FAIR plan was not enough to cover many homeowners' losses.
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In fact, The New York Times wrote: "More than 8 out of 10 of those whose homes were destroyed by the fires in … Los Angeles are still displaced, and 70% of insured … survivors have faced delays in receiving insurance payments or denials of coverage."
Why is this important?
As extreme weather events such as wildfires become more common due to increased atmospheric heat caused by high levels of pollution, people like those in L.A. are looking for real solutions, not Band-Aids.
One affected homeowner, Branislav Kecman, spoke on how "we thought we could trust the system" set in place meant to keep people safe.
Instead, insurance companies are increasingly withdrawing coverage from problem-prone areas.
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$200 or more 💰 Already, homeowners in Wisconsin have experienced a similar issue, but with flooding instead of fires.
What's being done about this?
L.A. residents made a call to action to the governor to install a new commissioner of insurance, in addition to imposing regulations on companies that allow for higher rates in exchange for coverage of at-risk locations, the New York Times detailed.
As insurance companies try to find loopholes in coverage claims — especially with the new state insurance laws taking effect in 2026 — people have begun to realize that change is needed.
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With increased levels of polluting gases in the atmosphere, extreme weather events become more frequent — more people's homes become "too risky," and insurance companies reduce their coverage.
Lobbying for policy changes and better consumer care is one way to help keep people protected, as is understanding why and how the endangerment of communities by catastrophes such as the L.A. fires can give companies leverage to avoid insurance payouts.
If people continue to place focus on consumer safety, policymakers will be forced to acknowledge and work with insurers to create better options for people who need them.
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