As the last of the flames of the 2025 Los Angeles fires were extinguished, many people and animals were left without homes, and some lost everything. Homeowners are now rushing to file claims for their property and belongings destroyed by the fires. 

However, insurance companies have dropped wildfire home insurance coverage in many neighborhoods affected by the fires. 

State Farm alone canceled insurance policies for around 1,600 homeowners in Pacific Palisades in mid-2024, an area hit by the blazes. According to CBS News, they were also found to have dropped more than 2,000 policies in two other Los Angeles zip codes.

So why did insurance companies drop coverage to these places? And how are they able to suddenly drop coverage?

Simply put, California is a wildfire-prone state. Insurance companies consider it unprofitable to insure areas like Southern California because of the high risk of wildfires and fire damage to homes. 

An estimate by CoreLogic on Thursday, Jan. 23 put the total insured losses from the L.A. fires between $35 and $45 billion. Some insurance companies cannot afford to reimburse this extremely large amount of money.

With climate change fueling a higher risk of wildfires, many insurance companies are deciding not to renew policies in the most at-risk counties, such as Los Angeles, Orange, Ventura, Kern, and San Bernardino counties.

These insurance companies, however, can only cancel policies for reasons specified by California law. Such reasons include “nonpayment of premiums, fraud, material misrepresentation or physical changes to the property that increase any hazard covered by the insurance” according to Policygenius.

In addition, the insurance company must notify the homeowner 60 days prior to the cancellation of their policy.

To prevent future wildfire damage, Governor Newsom has stationed “98 fire engines, 14 water tenders, 8 helicopters, 7 dozers, and dozens of specialized personnel” to Southern California Counties, in addition to Cal Fire’s deployment of 800 new firefighting personnel.

The federal government has even stepped in, with the U.S. House passing the Fix Our Forests Act. According to harder.house.gov, this bill will “upgrade wildfire prevention technology, tackle the dangerous firefighter shortage, and speed up funding to local fire departments” 

As climate change continues to escalate the risk of wildfire in California, people in high-risk zones are verifying their insurance to ensure they will get settlements for their claims. 

Sage Creek Biology teacher and Carlsbad resident Mr. Oberman has concerns about his wildfire risk.

“I do live in an area with pretty high fire risk,” Oberman said. “I live near a park and an area with a lot of chaparral and dry brush. That definitely puts my place at risk.”

Many homes in Carlsbad are insured by State Farm and Farmers Insurance, as well as smaller providers such as Aloha West, Hatter, Williams & Purdy Insurance and Harding Insurance Agency Inc. Given the insurance crisis in Los Angeles, homeowners in Carlsbad need to stay on top of their insurance policies. 

Mr. Oberman also stressed the danger of insurance companies canceling policies, expressing his fear for his own insurance being canceled. 

“I wasn’t really worried about it until seeing what happened with the LA fires just because it’s not something I think about day to day,” he said. “But what we were seeing in LA sets a dangerous precedent for these insurance companies to decide they won’t help anyone.”

“As a renter, I can only assume my renter’s insurance would be even less robust than an actual homeowners insurance policy. I would be a little worried that policies like mine would be more likely to be dropped,” Oberman said.

MyHazards is a resource for residents and homeowners to monitor their area’s wildfire and other natural disaster risks. 

For residents to ensure their claims are covered, they can take a video of the inside and outside of their homes. This will act as proof of ownership for all your belongings and make it significantly harder for insurance companies to deny your claims in the event of a disaster.