The conversations taking place at my family’s dinner table have undergone a rapid divergence from daily recaps to discussion of an issue that has become inescapable in California.
My family lives in Santa Barbara, so we are no strangers to fire. We were evacuated for two consecutive months during the Thomas Fire in 2018, and housed family-friend evacuees during the fires in Malibu and Los Angeles in 2025. We did the same with my grandparents from Northern California in 2020 during the Hidden Valley fire. Friends have lost their homes; pets have disappeared; I’ve lost a classmate and, devastatingly, know others who can say the same. Recently, however, a new layer to this existential threat to California has emerged: the insurance crisis.
Fire danger has become so severe in California that insurance agencies are beginning to leave as a result of it. On top of the devastation from fire damage, victims also have to deal with the aftermath of spiked insurance premiums or no insurance at all. Time and again, my parents will come home and report the news of who else has lost their fire or home insurance. These people are left with a suddenly common choice: pay exacerbated premiums, rely on California’s last resort, state-mandated insurance plan, or have no fire insurance at all. Family friends of my parents are largely making this decision from a comfortable place. Paying higher insurance prices sucks, but you’ve got to do what you’ve got to do. For those not fortunate enough to be well-off retirees, continuing to live in Santa Barbara, and California at all, is becoming infeasible.
On average, an instance of fire damage increases insurance rates by 30 percent, and up to 60 percent for a second case. The standard yearly homeowners insurance in California costs about $1,400 per year, but is over triple that cost in high-fire-risk areas. For example, Shasta County is considered a high-fire-risk area, and homeowner insurance prices are higher than average at about $1,900 annually and over $4,000 for certain zip codes. Santa Barbara County has an average annual homeowner insurance rate overall, however in high-risk areas homeowner insurance can be as much at $11,000 annually. In high wildfire-risk areas, Californians are forced to turn to the California Fair Access to Insurance Requirements (F.A.I.R.) Act. The F.A.I.R. Act is a state-mandated insurance option that provides basic property insurance to homeowners and businesses who are unable to access coverage in the private market. It is not taxpayer-funded, and is instead supported by private insurance companies operating in California. The F.A.I.R. plan is a last resort because it is significantly more expensive than typical insurance historically, while offering limited coverage. As insurers are pulling out of California and the cost of private insurance is rapidly rising, this last resort is becoming the new norm for Californians.
Cost of California F.A.I.R. Plan Insurance in an Alameda County Zip Code | Image Source: SF Chronicle
The recent surge in demand for F.A.I.R. plan insurance has motivated massive reforms.. The Make It Fair Act (AB 1680) was introduced in early 2026 by Assembly Member Lisa Calderon, pushing comprehensive bolster after a California Department of Insurance investigation revealed failures in the insurance system following the 2025 Los Angeles fires. These reforms include increased customer transparency and carrier accountability, raised customer service standards, expanded coverage beyond fire, and strengthened financial safeguards. To this end, the F.A.I.R. plan has also recently secured a $400 million catastrophe bond from private investors which will strengthen its ability to adequately cover the influx of users.
Using this “Sustainable Insurance Strategy,” California is attempting to keep insurers in the state and force them to cover at least 85 percent of users in wildfire-distressed areas. This strategy doesn’t keep insurance rates down and they rather reflect the market cost of business.
While these F.A.I.R. plan reforms are positive, an ever-increasing number of communities face real financial distress, driving many to extreme measures. For Californians, the choice between paying higher insurance prices or having no coverage at all doesn’t cut it. These people are given no choice but to exit California altogether in pursuit of an affordable cost of living.
This is contributing to California’s ongoing decline in population. California is already one of the most expensive states to live in, and the insurance crisis is pushing people away while driving the depreciation of home value. According to the SF Chronicle, home prices in California have dropped by about 4.3 percent, and even more so for high-fire-risk areas. This combination is devastating for those in California who can’t spare thousands upon thousands on depreciated house prices and spiked insurance costs, like Shasta County.
This relatively lower-cost community in inland NorCal has been disproportionately affected by wildfires and the insurance crisis. Existing wildfire mitigation procedures and alternative insurance plans are not effective enough to offset the effects, so the community has taken matters into their own hands.
The Shasta Board of Supervisors has approved two letters to be written and sent: one to President Trump and the other to Governor Newsom. The letter to the president will call for an expedited process to mitigate wildfire risk by reducing hazardous fuel use in the area and improving forest management practices, since Shasta’s landscape is widely under federal jurisdiction. The letter to the governor will address the insurance crisis, demanding that California implements serious reforms regarding insurance carriers, coverage, and market stability.
A combination of fire danger and destruction, a wave of insurance spikes and withdrawals, high cost of living, and lack of federal support have driven Californians to face an impossible problem. How do Californians maintain financial security when the cost of living already stretches them as thin as possible?
These questions have crept into the minds of those across California, including into my household. My stepfather Tom wrote to me when I asked him to tell me about his thoughts on the insurance crisis. “I pray every spring that State Farm renews our insurance. They have pulled out of California and aren’t writing anymore policies, but since we are grandfathered we still have our insurance so far and last year it only went up 5 percent. If we had to get the FairPlan, we are probably looking at an additional $10K-$15K a year which would be a hardship. We are but a microcosm and millions of people are in a similar situation.”
Tom’s stress is representative of many if not all homeowners in California. In a financially-stable household, resorting to the F.A.I.R. plan still poses a huge financial burden — one that many are not equipped to bear. Californians are paying the price for this devastating natural phenomenon, both as the victims of wildfires but also of the financial ruin it results in.
Feature Image Source: slworking2 on Flickr