There have always been Santa Ana winds and wildfires in California. However, climate change and human development make the two much more destructive. Warmer air dumps more moisture when it rains and snows, encouraging spring plant life. But then all those plants become kindling during hot, bone-dry summers and falls. When the Santa Ana winds blow down through the canyons out of the Great Basin in the colder months, all it takes is a spark to create a monster fire that spreads quickly.
Those fires generate new sparks, spreading across landscapes filled with houses over the past few decades. As Tim Sahay, co-director of the Net Zero Industrial Policy Lab, pointed out on Bluesky, these structures, built in what’s known as the wildland-urban interface, become their kindling.
The glut of homes in increasingly fire-prone places has created an insurance crisis in California, with many big insurers like State Farm and Allstate pulling out to avoid further losses. Nearly 500,000 Californians have turned to the state’s insurer of last resort, the FAIR Plan, which has doubled in size over the past five years. The state is now exposed to nearly $458 billion in potential damage, which has tripled since 2020.
The neighborhoods affected by the Palisades and other fires burning this week have been among the hardest hit by insurer defections in recent years. According to a San Francisco Chronicle tally, the 90272 ZIP code of Pacific Palisades experienced 1,930 policy non-renewals between 2019 and 2024, or 28 out of every 100 policies.
California FAIR Plan
Pacific Palisades is also the state’s fifth-largest user of FAIR policies, with nearly $6 billion in exposure. Even a fraction of that amount would exceed FAIR’s capabilities, which, according to the last report, had about $700 million in cash. Additional damage can be passed on to private insurers, who would immediately pass those costs on to their less-risky customers.
California Insurance Commissioner Ricardo Lara announced policy tweaks last month to encourage insurers to return to the state. They can now use catastrophe modeling to set rates after long being required to consider only historic losses. However, part of their modeling must also include property owners’ fire-defense measures. Insurers can also now pass the cost of reinsurance on to their customers. Providers lured back to the state by these incentives must cover risky areas at a rate of 85% of their statewide market share.
Such reforms aim to boost the availability of private insurance, keep it affordable, and improve the adequacy of coverage—the three “A’s,” as Kenneth Klein, a professor at California Western School of Law in San Diego, puts it. He suggests the new regulations will probably help with availability but won’t help with affordability; insurers will raise rates and use black-box models developed by actuariers and underwriting.
Private insurance plans are more adequate, meaning they cover more damage than the FAIR Plan. They are typically “replacement cost value” plans, compared with FAIR’s “actual cash value” plans. However, even private insurance plans aren’t always enough to fully reimburse a homeowner, given rising rebuilding costs, especially after a widespread disaster. Klein has suggested that 80% of Americans don’t have enough home insurance.
“People buying from private insurers will think they have full and adequate insurance. Their insurer may even think that” Klein said. “Most of them will not have that, and they’ll never know it because they’ll never have their home destroyed.”
This isn’t just a California problem. Other states on the front lines of climate change are underinsured for fires, floods, hurricanes, and other disasters that are becoming more frequent or intense as the planet warms. There may be more than $1 trillion in hidden home-value losses from floods and fires alone, posing the threat of a mini-financial crisis. Florida and many other states have their own insurance crises, which they have managed to varying degrees of failure. Many homeowners in these areas are turning to state insurers and lightly regulated insurers, taking on even more risk for themselves and, ultimately, taxpayers.
At some point, policymakers and the people living in risky places will have to decide when enough is enough. How often should we pay to rebuild a home on a wildfire-prone California hillside or a flood-prone North Carolina beach? How many first responders’ lives are worth risking so people can have beautiful views? When does insurance become a Band-Aid on a gushing wound?
The first and best thing we can do is stop burning fossil fuels, which heat the planet and worsen the problem. Until then, homeowners should understand how much insurance coverage they need and react accordingly. Building fire—and flood-resistant structures are possible, but can you afford them?
Policymakers must decide when to let rising seas or expanding deserts take over land where people used to live and build new, affordable housing for those in safer areas. This will involve reorganizing society’s thinking about property risk. But if we don’t start that process now, it will be forced on us, probably when we least expect it.
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Los Angeles Wildfire Recovery Assistance
Wildfire Recovery Family Assistance Centers have been set up at the following locations for the Eaton and Palisades fires.
Eaton
A Family Assistance Center has been established for those affected by the Eaton Fire.
Pasadena Convention Center – Visitor’s Bureau 300 E Green Street, Pasadena, CA 91101
Friday, January 10: 10 a.m. to 6 p.m. Saturday, January 11: 9 a.m. to 5 p.m.
The City of Los Angeles has established a Family Assistance Center for those affected by the Palisades Fire.
Cheviot Hills Recreation Center 2551 Motor Avenue, Los Angeles, CA 90064, Phone: (310) 837-5186
Friday, January 10: 10 a.m. to 6 p.m. Saturday, January 11: 9 a.m. to 5 p.m.
Additional Resources
Additional resources for people who have had to evacuate or have lost their homes:
Free Temporary Housing Provided by Airbnb
To support residents displaced from their homes or forced to evacuate by the wildfires, Airbnb is working with 211 LA, which serves Los Angeles County, to offer free, temporary housing. Stays are entirely free for guests and are funded by Airbnb and the generosity of Airbnb hosts—many of whom offer their homes for free or at a discount through Airbnb.org. Visit Airbnb.org for more information on how wildfire victims can obtain temporary housing or how to support Airbnb in their efforts.
Go-to resources and up-to-date information on the wildfires:
LACoFD information
Eaton Fire ANF Incident page
LA County Incident Response page
Palisades Fire CAL Fire Incident page
Los Angeles County Fire Department via Twitter/X: Follow @LACoFDPIO
Cal Fire
Ready.gov
American Red Cross Los Angeles Region: Provides shelter, food, and support. Donations
California Community Foundation’s Wildfire Relief Fund: Grants for wildfire-affected residents. More information
California Fire Foundation’s Supplying Aid to Victims of Emergency (SAVE) program Brings immediate, short-term relief to victims of home fires throughout California. More information
California Department of Social Services – Disaster Help Center
Children and Teenagers Under Evacuation Orders
The Los Angeles County Department of Parks and Recreation will start providing Care Camps for children and teens who are under evacuation or have been significantly impacted by wildfires. The Duarte, Arcadia, and La Crescenta, California camps will provide youth and teens with a supportive space for fun and recreation, including music, arts and crafts, sports activities, and field trips. Campers will visit the La Brea Tar Pits, the Natural History Museum, and Dodger Stadium. Breakfast, snacks, and lunch will be provided daily, and the teens will receive dinner. The camps will start on Monday and continue through the end of the month.
They are open Monday through Friday, with youth camps for children ages 5 to 12 from 8 a.m. to 5 p.m. and teen camps for children ages 12 to 17 from 8 a.m. to 7 p.m.
Employment Information
The State of California has protections for people who may not be able to report to work as usual because of the fires. This is not a conclusive list, and we are not employment experts, but here is some information for your information. California Paid Sick Leave (Healthy Workplaces, Healthy Families Act of 2014): Employees can use accrued paid sick leave to care for themselves or a family member affected by wildfire-related illness or injury.
California Labor Code § 230.3 requires employers to allow employees to take time off for certain emergency services, such as volunteering as a firefighter, reserve peace officer, or emergency rescue personnel during a wildfire.
California Family Rights Act (CFRA): Under this law, employees of employers with five or more employees may take up to 12 weeks of unpaid, job-protected leave to care for a seriously ill family member or themselves if a wildfire-related condition affects them.
Emergency Evacuation Rights (Labor Code § 1102.3): Employers are prohibited from retaliating against employees who leave work due to an emergency, such as an evacuation order during a wildfire.
School or Childcare Emergency Leave (Labor Code § 230.8): Employers with 25 or more employees must allow employees to take unpaid time off to deal with school or childcare closures due to emergencies, including wildfires.
California Unemployment Insurance Code: If a wildfire causes job disruption or loss, employees may be eligible for Unemployment Insurance (UI) or Disaster Unemployment Assistance (DUA) benefits through the Employment Development Department (EDD).
Report Price Gouging
People are taking advantage of this time to profit from those affected by the fires. If you see any price gouging, please report it above.
“California law generally prohibits charging a price that exceeds, by more than 10%, the price a seller charged for an item before a state or local declaration of emergency,” – California Attorney General Rob Bonta.
https://oag.ca.gov/contact/consumer-complaint-against-business-or-company