Devastating L.A. wildfires could impact California’s home insurance market. Here’s how
The vast property damage in a disaster-prone state with high real estate prices could make coverage more expensive and even harder to find.
The wildfires that destroyed homes in multiple sections of the Los Angeles area will test California’s efforts to stabilize the state’s insurance marketplace after many insurers stopped issuing residential policies due to the high fire risk.
The wind-driven blazes that started Tuesday roared through neighborhoods from the Pacific Coast inland to Pasadena and the Hollywood Hills. The vast property damage in a disaster-prone state with high real estate prices and an uncertain insurance landscape could make coverage more expensive and even harder to find.
One area likely to feel the impact—and encounter challenges rebuilding—is Pacific Palisades, an affluent community sandwiched between the Pacific Ocean and the Santa Monica Mountains. This week’s wildfire there has been named as the most destructive in the modern history of the city of Los Angeles. Flames destroyed businesses, a library, and cultural landmarks, as well as houses.
State authorities previously listed the Palisades as one of the five Southern California areas with the highest concentration of potential wildfire risks. The community also is among the areas most impacted by an unavailability of insurance coverage.
When State Farm decided to discontinue coverage for 72,000 houses and apartments in California last year, it dropped nearly 70% of its market share in Pacific Palisades, according to the San Francisco Chronicle.
Here’s what to know about California’s residential insurance crisis and how the ongoing wildfires may further disrupt the policy market: