Wildfire Insurance and FAIR Plan Gaps
The Insurance Crisis Reaches a Breaking Point
​​
California homeowners are facing an unprecedented insurance crisis. Over the past few years, major insurers like State Farm, Allstate, Farmers, and Liberty Mutual have either paused writing new policies or cancelled existing coverage across wildfire-prone areas. The numbers tell a stark story: in 2018, insurers refused to cover 180,000 California homes. By 2019, that number surged to over 235,000 properties.
Today, more than 451,000 homeowners have been forced onto the California FAIR Plan, the state's "insurance of last resort", representing a 123% increase over just three years. This isn't temporary coverage or a short-term solution. For many California families, the FAIR Plan has become their only option, despite offering less coverage at higher premiums than traditional policies.
Why Insurers Are Leaving California
​
The withdrawal of major insurance carriers stems from mounting financial losses and escalating wildfire risk. Between 1971 and 2021, the number of acres burned in California rose by 172%. California's Fourth Climate Change Assessment projects this trend will only accelerate, with a 77% increase in average burned area expected by mid-century.
Insurance companies have absorbed billions in wildfire-related claims. The January 2025 Los Angeles fires alone resulted in approximately $2.3 billion in losses for Lloyd's of London. When State Farm sought an emergency 22% rate hike following these fires, it highlighted the financial strain that's pushing insurers to exit the market or dramatically increase premiums.
The Pacific Palisades neighborhood exemplifies this crisis. State Farm chose not to renew about 1,600 policies there last year. As of September 2024, the area had 1,430 residential FAIR Plan policies—an 85% increase from the previous year. With nearly $6 billion in wildfire exposure, Pacific Palisades ranks among the top five highest-risk areas in Southern California.
​
2025’s Insurance Reforms: What’s Changing This Year
The California Department of Insurance has introduced new regulations for 2025 that require insurers to expand coverage in wildfire-prone areas and to consider wildfire mitigation steps (like hardening homes with fire-resistant roofs, vents, and defensible space) when setting rates. For the first time, insurance discounts and eligibility will be directly linked to the wildfire defense investments homeowners make. Commissioner Lara’s Sustainable Insurance Strategy mandates that insurers who use catastrophe modeling must offer at least 85% of their market share in voluntary policies to high-risk regions, helping transition policyholders out of FAIR Plan dependency.
​
The FAIR Plan: Still a Last Resort
While the FAIR Plan is an important safety net, its $3 million per-structure cap leaves many Bay Area luxury homes underinsured. As claim volumes rise after catastrophes, even the FAIR Plan faces strain, seeking additional funding to remain solvent.
​
What Homeowners Can Do Right Now
Invest in wildfire hardening, upgrading your home with fire-resistant roofing, exterior sprinklers, ember-proof vents, and clearing defensible space now brings real insurance benefits for 2025.​​
​
FireRoofs Wildfire Defense bridges the insurance gap by delivering advanced, proven wildfire protection that satisfies both insurance requirements and homeowner peace of mind. This is especially crucial for Bay Area luxury estates, where traditional insurance options are shrinking and the FAIR Plan often leaves multimillion-dollar homes underinsured.
​
How FireRoofs Wildfire Defense Closes the Insurance Gap
AI-Driven Wildfire Protection: FireRoofs equips homes with cutting-edge systems that include AI-powered fire threat monitoring, advanced exterior sprinkler networks, and smart controllers all designed to rapidly defend homes from wind-driven embers and intense heat, even during power outages
​
Proven Results: In landmark tests and real-world wildfires, 90% of properties outfitted with rooftop sprinklers and perimeter defense survived, compared to about 50% of unprotected homes.
​
Insurance Incentives: These mitigation upgrades now qualify homeowners for premium reductions, with State Farm and other insurers offering rebates of up to 5% and the California FAIR Plan offering discounts for comprehensive hardening measures.
​