California’s Fire-Insurance Crisis Just Got Real
6 min read
Susie Lawing moved to Cohasset, a small community located in the forested canyons above the city of Chico, California, in the 1970s. After she and her husband divorced, Lawing stayed, presiding over 26 acres of lush family compound. Loved ones built homes of their own on the property, and they began hosting weddings and retreats. Lawing started to grow her own food.
All of that is now gone, she told me. Two weeks ago, the Park Fire ripped through the property. Lawing, now 81, lost everything. She did not have insurance. Lawing lives modestly on Social Security benefits, supplemented by renting out her home and selling essential oils, and simply could not afford the $12,000 a year—$1,000 a month—home-insurance policy she was quoted for a state-backed policy, the last resort for many homeowners. Paying that would have doubled her monthly expenses. “There was no way I could afford that,” she told me. “What do you do? You just let it go.”
Now the family faces the prospect of rebuilding without a safety net. Lawing’s daughter has set up a GoFundMe page for her. (Her grandson Myles Lawing also has a GoFundMe set up for his dad, who had an uninsured home on the property.) Others on the crowdfunding site are raising money for families who’d lost their homes to fire once before, when just six years ago, the deadly Camp Fire raged through the town of Paradise, just 30 minutes down the road. Some Paradise families, such as the Bakers, chose to resettle in Cohasset, only to have their new home burn.
This is the reality of California’s new age of fire. Wildfires have gotten more ferocious in recent years, thanks in part to warming temperatures: Park is the fourth largest in the state’s recorded history. As homes in high-risk areas become harder to insure, premiums are rising, and some insurers are leaving the state altogether. The safety net that people once depended on has developed holes, and now people are falling through.
“People need insurance. It’s essential for their recovery,” Carolyn Kousky, the associate vice president for economics and policy at Environmental Defense Fund, told me. But if state-funded insurance is people’s only option, she said, the question becomes “How much are we going to subsidize that?” As climate change brings about bigger fires and stronger hurricanes and more intense floods, the country is being forced to decide what homes to save and whom to leave on their own.
California’s insurance crisis first started around 2017. In that year and the ones that followed, a series of costly fires erased decades of profits, and forced insurance companies to reconsider their rates and their presence in the state. Premiums began rising, and in the past two years, major national companies including State Farm, Farmers, and Allstate, as well as smaller firms, have pulled back, declining to renew tens of thousands of policies. Coming on top of rising inflation and building costs, wildfires have made the cost of doing business just too high, insurers argue. For those living in areas where no private company will take on the risk, California offers a last-resort option called FAIR. From 2019 to 2024, as insurance companies retreated, the number of California FAIR plans has more than doubled. But FAIR plans are also getting more expensive. Many Californians are underinsured—and some are opting to go without insurance at all.
The people living in the Park Fire burn area are struggling with these exact dynamics. Counting how many people are uninsured in a given area is difficult. But from 2015 to 2021, insurance companies issued almost 7,000 nonrenewal notices in Cohasset’s zip code, which has about 13,000 properties total, according to state data, analyzed and provided to me by First Street Foundation, a nonprofit that models climate risk. That means insurance companies potentially pulled policies for more than half of the homes in the area. And these data are only through 2021, before the exodus of insurers began in earnest.
Cohasset is located in an extremely risky part of the state; First Street Foundation’s models put it at severe fire risk, and predict that 100 percent of the structures in the area will be threatened in the next 30 years. People might balk at high insurance rates, but those prices are a warning of disaster to come. “As brutal as it is, when insurance companies stop offering insurance, it’s a signal that the risk is uninsurable—that those losses are coming,” Abrahm Lustgarten, a reporter and the author of On the Move, a book about climate migration, told me. Blunting these signals with policies such as state-subsidized insurance plans may create incentives to stay when families should really consider leaving.
But moving isn’t easy. It means leaving a life behind, perhaps generations’ worth of local memories. It means uprooting oneself from the community you grew up in, and maybe even saying goodbye to loved ones. For some, this is too difficult. Others are just overly optimistic about the risk—psychology and behavioral-economics research suggest that people have a hard time processing such risk, Kousky pointed out.
Others just can’t afford to go elsewhere. Leaving a place might mean leaving a job, or a business, or a garden that helps you save on groceries. California is an extremely expensive place to live. Moving from the edge of the forest to a city would be safer, but infeasible for some people. Sky-high costs of living have pushed people farther and farther out in search of cheaper housing—and directly in the path of fire. Lustgarten’s reporting suggests that Americans are less likely to pick up and run in terror from disaster, he told me, and more likely to uproot when the cost of staying becomes unrealistic, whether because of a disaster like Park or the rising cost of air-conditioning in a hot area like Phoenix. At first, such migration can be incremental—moving from one town to another nearby, as the people who moved from Paradise to Cohasset did, which didn’t put them beyond risk. People may have to experience loss multiple times before they truly uproot themselves.
The Park Fire is still burning, slinking through the Sierra Nevada and threatening thousands of homes and buildings in the small mountain towns that dot the region. Already, some 600 structures have burned. FEMA provides some individual assistance in the aftermath of a disaster. But the agency has warned over and over that the funding it can offer is no substitute for insurance. Many fire victims are now turning to crowdfunding resources such as GoFundMe to try to blunt catastrophic financial losses: In the past five years, the number of wildfire fundraisers on GoFundMe has tripled, a representative for the company told me in an email.
Lawing’s daughter Jessica Adams told me that she probably wouldn’t be grieving the loss of her family’s compound so hard if they’d had insurance. They still would have been devastated—but at least they’d know they had money to rebuild. Her mom wants to move back to the property—to get out of the city where she’s taken refuge and back up into the hills where the birds and frogs sing. They’re considering building some kind of yurt or tiny house. But they’re facing a long road back to any kind of stability. “I don’t know what the answer is. But I sure wish there was more support,” Adams told me. Her voice began to wobble, then break. “It really would have been nice if my mom had insurance. And she couldn’t get it.”
In the coming decades, as climate change makes disasters more likely, Americans will need to decide how to approach situations like this. The solutions don’t have to mean clearing whole areas of people altogether. Kousky said that, in the case of floods, she’s seen proposals to offer lower premiums only to the people who really need it—while forcing more affluent families to pay the full price to live in these zones. She told me that she hasn’t seen that policy suggested for wildfire insurance yet. The reality, though, is that people will continue to live in places like Cohasset, even if it means taking the risk that a fire could burn through their life and leave them scrambling for a way to recover.
