Families Forced to Evacuate as Wildfires Devastate Los Angeles
Earlier this month, wildfires erupted across Los Angeles, California, forcing thousands of residents to flee their homes. Among those affected were Jewlz and Terry Fahn, a couple who had to evacuate their Pacific Palisades home in a hurry.
“When my husband called me, I didn’t fully grasp the urgency,” said Jewlz Fahn. “I grabbed a pair of shorts, thinking about the heat later in the day, not realizing that we might not come back.”
Unfortunately, their home was completely destroyed in the fire, along with most of their belongings. With limited options available, they are now staying in a hotel with their dog, Coda, while they search for a rental property.
The Fahns are just one of thousands of households trying to recover after the devastating wildfires. The destruction affected over 13,000 buildings and resulted in damages exceeding $250 billion, as estimated by AccuWeather
Insurance is typically the primary safeguard for homeowners in such disasters, offering financial assistance to help them rebuild. However, with climate-related catastrophes becoming more frequent, questions are emerging about whether insurers can continue to provide coverage. Some experts warn that this trend could eventually lead to a future where many homes become “uninsurable.”
The Growing Reliance on the FAIR Plan
Jewlz and Terry Fahn now have no choice but to seek assistance through the FAIR Plan, a state-backed insurer of last resort. This plan exists to provide coverage for residents who cannot obtain policies through private insurers. However, officials have noted a sharp increase in the number of households relying on it. From 2020 to 2024, policies issued under the FAIR Plan more than doubled. For homeowners who have lost everything in the aftermath of these fires, seeking guidance from an Altadena fire attorney at the law firm California Business Lawyer & Corporate Lawyer may help them navigate insurance claims and potential disputes.
One of the key challenges with the FAIR Plan is that its coverage is typically more expensive than private insurance while offering more limited protection.
The Fahns found themselves in this predicament when their longtime insurance provider, State Farm, refused to renew their fire policy in the fall of 2024—just months before their home was consumed by flames.
“It was shocking,” Jewlz Fahn recalled. “We had been loyal State Farm customers for over two decades. We paid on time, never filed a claim, and still, they dropped us. It just doesn’t make sense.”
Mass Policy Cancellations Amid Rising Risks
Their concerns began in March 2024 when State Farm announced its decision to withdraw fire coverage for 72,000 policies in California. The company justified the decision as a necessary step to maintain financial sustainability. By July, the Fahns received an official notice stating their fire coverage would not be renewed due to the “substantial wildfire hazards” in their area. Their policy was set to expire on October 14, 2024—less than three months before the fires tore through their neighborhood. People affected in broader areas of Los Angeles should also consider consulting a Los Angeles wildfire attorney at the Nakase Law Firm to explore legal options for recovering losses and holding insurance companies accountable.
According to State Farm, these non-renewal decisions were not taken lightly. In a statement, the company said it had conducted extensive analysis to ensure that it could continue operating sustainably.
“As difficult as this situation is, our priority is to remain in a position where we can serve our customers,” State Farm stated.
State Farm is not the only insurer taking this approach. Over the past four years, at least ten major insurance companies have either ceased operations in California or significantly reduced their coverage. Officials confirm that during this period, the number of homeowners turning to the FAIR Plan doubled.
In recent years, companies such as Allstate, American National, The Hartford, and State Farm have all stopped issuing new fire insurance policies for California homeowners.
Insurance Companies Struggle to Balance Costs and Risks
Sean Kevelighan, CEO of the Insurance Information Institute, explained that insurance providers are left with little choice but to cut policies due to state regulations limiting rate increases. He pointed out that companies are unable to adjust prices to reflect the growing risk posed by wildfires.
“California is one of the largest economies in the country, and insurers would love to continue doing business there,” Kevelighan said. “But when they are forced to operate under restrictions that make it unprofitable, they have no option but to issue non-renewal notices.”
The Insurance Industry’s Profits and Its Role in Climate Change
Despite growing risks in California and other climate-vulnerable regions, the property and casualty insurance industry has continued to generate massive profits. In 2023, insurers posted record earnings of $88 billion. That figure was dwarfed by the $130 billion in profits amassed over the first nine months of 2024, according to AM Best, a credit rating agency.
Critics argue that these profit figures demonstrate that insurers are abandoning homeowners even as they enjoy financial success.
“They claim to be a risk-bearing industry, yet at the first sign of increasing risk, they walk away,” said Douglas Heller, director of insurance at the Consumer Federation of America. “Even as they pull out of our communities, their profits keep rising.”
However, Kevelighan countered that focusing solely on industry-wide earnings overlooks the specific financial pressures caused by increasing climate-related disasters.
“When discussing insurance, we need to consider the broader economic landscape,” he said. “The industry employs over three million people and serves a crucial role in maintaining economic stability.”
Consumer advocates also question the investments made by insurance companies. A study published by climate advocacy groups Ceres and Environmental Resources Management, along with risk assessment firm Persefoni, revealed that U.S. insurers collectively hold more than $500 billion in fossil fuel-related assets.
Former California Insurance Commissioner Dave Jones argued that this investment pattern is contradictory.
“The biggest driver of climate change is our failure to transition away from fossil fuels,” Jones said. “Yet, insurance companies, the very entities that claim to be struggling with climate-related risk, have poured over half a trillion dollars into the fossil fuel industry. Their actions directly contribute to the risks they cite as reasons for denying coverage.”
Insurers Defend Their Investment Strategies
Kevelighan, however, defended the industry’s investment decisions. He maintained that these assets are critical for insurers to maintain enough financial reserves to pay out claims when disasters strike.
“The insurance industry’s investment portfolio is heavily weighted toward bonds and fixed-income investments that contribute to economic growth,” he said. “Regardless of personal views, the reality is that our global economy still relies on fossil fuels.”
He added that insurers are focused on maintaining financial security so they can meet their obligations to policyholders over the long term.
Homeowners Left in Uncertainty
For Jewlz Fahn, the ordeal has been overwhelming. She acknowledges that the FAIR Plan will provide some assistance but worries that it won’t fully cover her family’s losses.
“I still feel uneasy, not knowing how much we will actually receive compared to what we lost,” she said. “It’s terrifying.”
She also remains frustrated with the way insurance companies have handled the situation.
“Insurance exists to protect people,” she said. “That’s the entire point. Yet, they dropped us and so many others, even though they have the financial capacity to insure us.”
As wildfires become more frequent and severe, more homeowners may find themselves facing similar struggles. With insurance companies retreating from high-risk areas, the question remains: Will there come a time when entire regions become uninsurable?
For now, families like the Fahns can only wait and hope that the system they relied on for protection does not abandon them completely.
