Home Insurance Market Update

Over the past five years, Californians have faced an alarming average of more than 5,000 wildland fires annually, resulting in the destruction of approximately 800,000 acres each year. The financial impact on property owners has been substantial; from 2022 to 2023 alone, wildfires in California caused damages exceeding $3.2 billion. This issue isn't confined to California; many western states, such as Arizona, have also grappled with increasing wildfire incidents, and even Florida experienced several wildfires in 2022. Recently, Hawaii was hit hard by a series of devastating wildfires on Maui.

As the costs of wildfire damage escalate, insurance companies are facing higher claims payouts, leading them to rely more on reinsurers—companies that help insurers manage their risk. Unfortunately, this trend puts financial pressure on everyone involved. To mitigate their risks, reinsurers often raise their prices, which in turn forces insurance companies to increase premiums for homeowners or issue nonrenewal notices, effectively canceling policies. Since 2019, non-renewals in California have risen by over 31 percent, posing challenges for residents in wildfire-prone areas.

Fortunately, if you receive a nonrenewal notice or face unaffordable premium hikes, there are steps you can take to secure coverage for wildfire damage.

Is fire insurance required in California? While there’s no state law mandating fire insurance, most mortgage lenders do require it as a loan condition. Therefore, if you have a mortgage, you’ll likely need fire insurance. Even if you own your home outright, having fire insurance is advisable since fires can arise from various unforeseen causes.

Now, let’s explore how California homeowners can find affordable fire insurance options.

1. Shop for Fire Insurance: Whether you live in California or elsewhere, take the time to compare fire insurance options. Find a good insurance agent or broker who has access to multiple options. Agents and brokers can help homeowners make informed decisions, find discounts and tailor coverage. If you have to choose between insuring your home or the stuff inside it, always choose your home. 

2. Explore Non-Admitted Fire Insurance Carriers: While most familiar insurance companies are "admitted" carriers, some are "non-admitted," meaning they are not approved by the state’s insurance department. These carriers can assume more risk and may be your best option if you live in a high-risk wildfire area.

3. Contact our Resource Center Use the Contact Us link to connect with us and we can connect you with the multiple carriers and knowledgeable insurance brokers in your area. https://www.yourhomefirescore.com/about