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There’s little question why homeowners choose to build in Southern California.
“People want to live in beautiful places,” retired fire chief Glenn Corbett told The Independent.
At the same time, Corbett, a professor of fire science at New York City’s John Jay College of Criminal Justice, can’t understand why anyone would actually do so.
As enormous swaths of the Los Angeles area continue to be ravaged by a series of wildfires burning out of control for the third day in a row, many Californians find themselves without adequate insurance coverage to rebuild their ruined homes.
Insurance giants State Farm, AIG, and Allstate have each stopped writing homeowner policies in California because of wildfire danger. According to a report issued Wednesday by JP Morgan, the insured losses stemming from the Palisades Fire will likely approach $10 billion. Those costs will be borne by the remaining insurers in the state, the top three being Farmers, Berkshire Hathaway, and Travelers. To fill in the gaps, the State of California acts as the so-called insurer of last resort, writing prohibitively costly homeowner policies that will only get pricier following this latest catastrophe. And for homeowners with mortgages, which require insurance coverage, going without is not an option. (Only 18 percent of California residents own their homes outright.)
“There’s a lot of vested interest in building, with wood, in areas that shouldn’t be built in,” Corbett said. “We need to make it incredibly expensive to build in these kinds of environments. That’s all you can do… If the insurance industry refuses to sell policies, maybe people won’t risk it.”
Appearing Wednesday evening on The Tonight Show with Jimmy Fallon, actress Jamie Lee Curtis called the unimaginable wildfire damage “a catastrophe.” Comedian Billy Crystal reportedly lost his home, as did other prominent Angelenos including socialite Paris Hilton, two-time Oscar-winner Anthony Hopkins, and funnyman Eugene Levy, whose house was reduced to rubble.
Earlier in the day, actor and right-wing conspiracy theorist James Woods posted a video clip on social media of a neighbor’s house, engulfed in flames, in L.A.’s Pacific Palisades neighborhood, a wealthy enclave between Santa Monica and Malibu that boasts a median home price of $3.3 million.
“[O]ne of the major insurances [sic] companies canceled all the policies in our neighborhood about four months ago,” Woods wrote.
A Pacific Palisades resident who recently sold his home and moved out of state shared photos with The Independent of his old street, which he described as looking “like a war zone.”
“It looks like a bomb went off,” he said in a text message. “The entire town is gone. All the houses. All the stores. The schools are damaged. The churches are gone. I can’t begin to explain how horrible I feel for all my neighbors and friends.”
The smoke plume from the Palisades fire extended hundreds of miles out into the Pacific Ocean.
In Eaton, another section of L.A. hit hard by the flames, a local ER nurse was trying to protect her parents’ uninsured home with a garden hose.
“They’ve lived in this house for 75 years and they’ve had the same insurance and these insurance people decided to cancel their fire insurance,” she told ABC.
Those who do have fire coverage will likely face uphill battles with their insurers in being made whole again, the director of a prominent California nonprofit consumer group told NBC News.
“When insurance companies face higher losses or payouts, they typically respond in two ways: raise premium prices and stop renewing policies or writing new policies,” former California Insurance Commissioner Dave Jones said in September. “California insurers are doing both.”
In December, California’s sitting insurance commissioner dubbed the combination of exorbitant rates and a dearth of available policies a “crisis.” And now, according to one industry expert, the situation will only get worse.
Yet, higher prices will never be enough, according to Jones.
“In the long term, we’re not going to be able to ‘rate increase’ ourselves out of this problem,” he said.
Homeowner insurance becoming altogether unavailable in places like Pacific Palisades, where the current spate of fires began on Tuesday, is the best, if somewhat counterintutive, way forward, according to Corbett. It is the only realistic way, he said, to prevent homes from being destroyed by the blazes that have become more frequent in the Golden State than ever before, thanks largely to climate change. Yet, for many people who already have homes there and would be forced to move at a time when real estate is prohibitively expensive, the notion of relocating isn’t necessarily an option.
The destruction wrought by wildfires in California has increased steadily since 1950, with warming temperatures and an earlier spring snowmelt to blame, according to the California Air Resources Board, a public agency tasked with improving the state’s air quality. This has created the perfect conditions for “extreme, high severity wildfires that spread rapidly,” the board says on its website, which points out that eight of the state’s 20 largest-ever fires have occurred since 2017.
In 2024, the California Department of Forestry and Fire Protection, known as Cal Fire, battled 8,024 wildfires that burned more than 1,000,000 acres of land, and damaged or completely destroyed 2,148 houses and other structures. Since the Palisades Fire first broke out on Tuesday, about 2,000 houses and structures have burned to the ground. The fires are only going to get worse in coming years, according to Corbett.
The political will simply isn’t there to forbid new construction in wildfire-prone places, and such regulations “would never go through,” Corbett told The Independent. Instead, Corbett reiterated the notion that the true responsibility lies with insurance companies.
It’s a message that seems to make sense to Brett Dedeaux, a Pacific Palisades resident whose home was leveled in this week’s fire.
As he told The Wall Street Journal, “Does it even make sense to own a house here when the insurance is so much?”
