As Los Angeles residents grapple with the aftermath of devastating wildfires, concerns are mounting about insurance coverage for rebuilding costs. Many fear their policies may not be sufficient, leading to astronomical premiums and potential bankruptcies of insurance companies. The fires have caused widespread damage, prompting the California Insurance Commissioner to suspend policy cancellations and offer insurance workshops.
A cyclist looks at the remains of destroyed buildings following the Palisades Fire in the Pacific Palisades neighborhood in Los Angeles, California, U.S. January 10, 2025. REUTERS/David Ryder
"My concern is that the insurance companies won't be able to handle all the claims and file for bankruptcy and that's that. It's scary," said De La Torre, 32, whose uncle and sister both lost their houses in a fire that consumed half of Altadena, a suburb north of Los Angeles of some 40,000 people. Following the fires this week, California Insurance Commissioner Ricardo Lara invoked moratorium powers to suspend all policy non-renewals and cancellations from insurance companies for one year.
Many residents in Altadena, a racially and economically diverse suburb, are covered by the California FAIR Plan, an insurance program backed by the state of California that is used by property owners who cannot find private market coverage.As private insurers have rejected or dropped homeowners in fire-prone areas of California, residents have increasingly switched to FAIR Plan, data shows.
CALIFORNIA WILDFIRES INSURANCE REBUILDING COSTS PREMIUM INCREASES FAIR PLAN
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