Can I Get Fire Insurance in California?
Yes! and we can help!
In January 2025, Los Angeles experienced one of its most devastating wildfire seasons to date, with the Palisades Fire causing unprecedented destruction. The blaze ignited on January 7 and rapidly spread due to strong Santa Ana winds, ultimately consuming over 11,000 acres between Santa Monica and Malibu. The fire destroyed more than 5,300 structures, including homes, businesses, and cultural landmarks, and resulted in at least 10 fatalities. In addition to the Palisades Fire, the Eaton Fire ignited on January 7, 2025, in the Altadena area near Los Angeles. The blaze rapidly spread, consuming over 14,000 acres and resulting in at least 17 fatalities. The fire destroyed more than 9,000 structures, including homes, businesses, and cultural landmarks. The severity of these wildfires underscores the critical need for proactive measures to address the impacts of climate change and to implement strategies aimed at safeguarding communities against future disasters.
The severity of these wildfires underscores the critical need for proactive measures to address the impacts of climate change and to implement strategies aimed at safeguarding communities against future disasters.
The escalating costs of wildfire damage have led insurance providers to bear a heavier burden of claims, prompting them to turn to their own insurers, known as reinsurers, for coverage. This domino effect translates into increased financial strain across the board. Reinsurers, in order to manage their risk exposure, often find themselves compelled to hike prices for their clients. Consequently, insurance companies are left with little choice but to pass on these increased costs to policyholders through raised premiums or even nonrenewal notices. Indeed, in California alone, non-renewals have surged by over 31 percent since 2019, highlighting the mounting challenges faced by homeowners in securing adequate coverage.
Is fire insurance mandatory in California?
Before delving into strategies for securing more affordable fire insurance, let's address a fundamental question: is it necessary? While there's no statewide mandate in California requiring property owners to have fire insurance, most mortgage lenders stipulate it as a prerequisite for loans. Hence, if you hold a mortgage on your property or have a lender for a commercial building, fire insurance is likely obligatory. Even if you own your home outright, opting for fire insurance is a prudent decision. Fires can ignite from various sources beyond your control, such as electrical malfunctions, lightning strikes, fallen power lines, discarded cigarettes, and more. By carrying fire insurance, you ensure that you and your loved ones can maintain a semblance of normalcy even in the face of unforeseen disasters.
Now, let's explore how California commercial property and homeowners can navigate the landscape of finding affordable fire insurance.
Work with an Independent Broker: Collaborating with an independent broker like Riskwise Insurance grants access to a broad network of insurance carriers that may not be available through other channels.
Seek Recommendations: Tap into your social network and ask friends and family in California for recommendations on insurance companies they trust. Compile a list of these suggestions and start gathering quotes to compare.
Consider Non-Admitted Carriers: While most insurance companies are "admitted" carriers approved by state insurance departments, non-admitted carriers operate outside this regulatory framework. These carriers, also known as surplus or specialty carriers, may be more flexible in providing coverage, particularly for properties in high-risk wildfire zones.
Explore California FAIR Plan: The California Fair Access to Insurance Requirements (FAIR) plan serves as a last resort insurer for homeowners who have diligently sought coverage elsewhere. However, it's essential to understand the following aspects if you opt for this plan:
You're responsible for determining the appropriate coverage amount.
FAIR plan coverage excludes theft and liability, necessitating additional coverage considerations.
Coverage through FAIR plan is capped at $3 million for residential and 20 million for commercial, potentially requiring supplemental coverage or self-insurance for higher rebuilding costs.
Considering the unpredictable nature of California fire insurance prices, homeowners should brace themselves for potential premium increases. However, these costs, though significant, are often less burdensome than facing the financial repercussions of rebuilding a home from scratch without insurance coverage.
