Stuck in the middle of the crisis are California’s major insurance companies, some of whom managed to flee before the disaster began, while others, including the state-backed FAIR Plan, face payouts that could bankrupt them.
Major insurers who’ve either halted the issuance of new policies or quit California entirely in the last five years include Allstate, AIG, American National, AmGUARD, Falls Lake, Chubb, Travelers, Farmer’s and The Hartford.
Nationwide announced last year that it would withdraw from California by June 2025. State Farm, until now the state’s largest home insurer, started halting renewals to policies in early 2024, cancelling over 72,000 to date.
California’s state-backed FAIR Plan stepped in where private companies backed out, but costs more (about $3,200 per year and climbing) and provides lower coverage. The program has $458 billion in exposure, and already faces up to $24 billion in losses thanks to January's fires.
Wildfires are just one of the natural disasters making wide swathes of the US uninsurable.
On the East Coast, millions of Floridians, and residents of other hurricane and flooding-prone coastal areas from Texas to Massachusetts, are facing the same problem: declining coverage and soaring premiums. In 2023 alone, the US recorded 28 major climate disasters causing over $93 bln in damage.