Wildfire Insurance
It’s a complex issue, and one that is continuing to change in an ongoing manner.
For many homeowners in Southern California and across the State, securing appropriate and reasonably priced fire insurance is problematic. Multiple insurance carriers have either fled the State entirely, or are no longer underwriting new business. For people living in the Wildland Urban Interface, that creates tremendous financial hardship and added stress related to wildfires.
Whose fault is it?
Acres Burnt by Wildfires in California
In just the past 20 years, California has experienced the worst wildfires in recent memory. In the greater Los Angeles region, some of the largest and most destructive fires in the history of the county and the city have occurred. With more than 1.2 million homes in the state at risk, and 227,000 (and climbing) in the city and county of Los Angeles, the numbers are staggering.
Equally staggering is the rising costs of repairing or replacing structures either damaged or lost to fire. The net result is insurance companies are being hit hard with wildfire claims. Insurance carriers paid out $13.2 billion and $11.4 billion respectively in 2017 and 2018 for fire damage claims resulting from those two catastrophic wildfire seasons. Wildfires have burned nearly 10 million acres of wildland and destroyed more than 39,000 homes in California over the last five years.
Assigning risk may seem simple at first, but it’s a complex issue. The insurance models related to wildfires are more than twenty years old. Twenty years ago, wildfires didn’t behave the way they do today. The past eight years have seen a completely new climate reality. In 2017, the Thomas Fire was the largest fire in California’s recorded history. In 2024, it had fallen to be the ninth-largest fire in the State.
The insurance industry must rework its entire model to protect California consumers. The State Insurance Department is working to push those changes forward. But for the first time, homeowners must now take responsibility for protecting their homes and property from ignition as well. Today, the risk is shared.
The fault can’t be placed solely at the doorstep of insurance carriers. In 1988, voters approved California Proposition 103, which allowed the State Insurance Commissioner to reject proposed rate increases and order refunds to consumers. In September of 2023, following a mandate by the Governor, by the end of 2024, insurance carriers who sell fire insurance in California must allocate 85% of their sales to people living in at-risk communities (within the VHFSZ), but in exchange, they can set rates based on forward-looking AI-style risk projections.
2024/2025 Insurance Premiums and Requirements in California
Different requirements for eligibility and/or discounts
| Mitigations | Wildfire Prepared Homes | Admitted | Non-Admitted | FAIR Plan |
|---|---|---|---|---|
|
Class-A Fire rated roof |
Required |
Required |
Required |
Required |
|
5-foot non-combustible zone (including fences) |
Required |
Discount |
Required* |
Discount |
|
Non-combustible 6 inches at the bottom of exterior walls |
Required |
Discount |
N/A |
Discount |
|
Ember and fire-resistant vents |
Required |
Discount |
Required* |
Discount |
|
Upgraded windows (Double paned or added shutters) |
N/A |
Discount |
Required* |
Discount |
|
Enclosed eaves |
N/A |
Discount |
Required* |
Discount |
|
Enclosed underdeck |
Required |
N/A |
N/A |
N/A |
|
No combustible materials underneath deck |
Required |
Discount |
Required* |
Discount |
|
No sheds or combustible outbuildings within 30 feet |
Required |
Discount |
N/A |
Discount |
|
No combustible structures on combustible deck (pergolas, hot tubs, decks) |
Required |
N/A |
N/A |
N/A |
|
Defensible space compliance – trimming/spacing of trees, removal of brush and debris |
Required |
Discount |
Required |
Discount |
The California FAIR Plan
The California FAIR Plan is mandated by the state to provide the most basic form of home insurance coverage to high-risk homeowners (who’ve been denied coverage by mainstream carriers). The program is funded by a group of insurance carriers – and should be considered a “temporary safety net” that will at some point be replaced by mainstream insurance carriers.
Fire
Smoke
Lightning
Internal explosion
The basic FAIR Plan does not provide coverage for most other threats, including:
You can in some cases purchase additional coverage under the FAIR Plan, often at considerable cost. Some of these add-ons include:
No liability coverage
For coverage that relates to liability, medical payments coverage, or theft, you’ll have to purchase a separate policy, often referred to as a “wraparound” or “difference in conditions (DIC) policy.
Who is eligible for the FAIR Plan?
After you’ve done that, there are some additional criteria your home and property must satisfy, including:
- In good condition (related to the real estate market)
- Not boarded up (or otherwise abandoned)
- Properly secured with all doors and windows locked
- No broken windows or skylights
- Has not been vacant for more than a year
- Isn’t used for illegal activity
California Fair Plan Discounts
On August 23, 2023, the California FAIR Plan announced a new opportunity for homeowners to qualify for discounts to their FAIR Plan policies. The new discounts are designed to provide some peace of mind to policyholders.
The discounts are broken into two groups, and the percentage of discount will depend on how many things a homeowner can demonstrate to have completed reducing risk to either property or structures – or both. This includes HOME HARDENING and DEFENSIBLE SPACE.
Some of the items that can assist you in qualifying for discounts include:
California Fair Plan Discounts
On August 23, 2023, the California FAIR Plan announced a new opportunity for homeowners to qualify for discounts to their FAIR Plan policies. The new discounts are designed to provide some peace of mind to policyholders.
The discounts are broken into two groups, and the percentage of discount will depend on how many things a homeowner can demonstrate to have completed reducing risk to either property or structures – or both. This includes HOME HARDENING and DEFENSIBLE SPACE.
Some of the items that can assist you in qualifying for discounts include:
Defensible Space Protection
- Cleared vegetation and debris from under decks
- Removal of combustible shed and other outbuildings from the immediate surroundings of the home, to at least a distance of 30 feet (see Zone 1 in our Defensible Space description)
- Trimming trees, removal of brush and debris from yard, and compliance with state law and local ordinances – specifically the LAFD or LAcoFD Brush Fire Code
Home Hardening Protection
- Class-A Fire rated roof
- Maintaining a 5-foot ember-resistant zone around a home (including fencing within 5 feet) – this is referred to as Zone 0 in our Defensible Space instructions
- Noncombustible 6 inches at the bottom of exterior walls
- Ember and fire-resistant vents
- Upgraded windows (Double paned or added shutters)
- Enclosed eaves
One additional benefit is that discounts based on taking the steps identified by the FAIR Plan are in addition to discounts provided by the NFPA Firewise USA initiative.
How to apply?
Currently, for most people living in the Wildland Urban Interface, the California FAIR Plan is a good option if you’ve been denied traditional fire insurance coverage. Insurance companies are investing significantly in learning more about risk, climate change, and how to help homeowners quality for traditional policies, but it may be years before these carriers return to California.
If you’re interested in finding wildfire insurance for your structure, the FAIR Plan may be your best bet.
