Insurance in fire-prone areas is expensive. California homeowners insurance rates increased by more than 43% between 2018 and 2023, according to an analysis by S&P Global. 

Some major insurers have stopped writing policies in California, citing fire risk along with inflation. The FAIR Plan, the state-mandated insurer of last resort for those who can’t find other coverage, added 212,960 new policies for homes and businesses in the fiscal year ending September 2024, more than double the number from the year before. FAIR Plan policies are concentrated in fire-prone counties, accounting for more than a quarter of new policies in the 10 counties with highest fire risk, according to the most recent Department of Insurance data.

Higher prices have influenced purchasing patterns, researchers with the RAND Corp. have found: Policyholders are buying less coverage, low-balling the cost to fully replace their belongings and electing higher deductibles.

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