AS wildfires devastate Los Angeles, the destruction of lives and homes is not the only challenge California residents are facing.
The unrelenting fires have also caused a home insurance crisis in The Golden State, with many big insurers pulling coverage and leaving homeowners with limited options.
Multiple wildfires have ravaged parts of Southern California since Tuesday, January 7, scorching tens of thousands of acres.
Hundreds of thousands of people are under evacuation orders or warnings and at least 24 have died, with the death toll rising.
The fire in the Los Angeles neighborhood Pacific Palisades – one of the most expensive US neighborhoods – is the largest of the wildfires and could become the most destructive fire in state history.
Although the cause of the wildfires is still unknown, the dry conditions and powerful, prolonged Santa Ana winds are spreading the blaze.
The LA wildfires may be the costliest in US history, with insured losses potentially exceeding $20 billion, according to estimates published by JPMorgan.
“The fires have not been contained thus far and continue to spread, implying that estimates of potential economic and insured losses are likely to increase,” said JPMorgan analyst Jimmy Bhullar in a research note.
The fires have not been contained thus far and continue to spread, implying that estimates of potential economic and insured losses are likely to increase.”
Jimmy Bhullar
As California’s wildfires become more frequent and severe, many major insurance companies such as State Farm, Nationwide, and Farmers are pulling out of the state.
These big insurers have cut coverage and canceled home insurance policies in areas at risk of wildfires to avoid more losses.
Seven out of 12 of the top insurers in California cut coverage in the state over the past four years, per the California Department of Insurance.
Residents impacted by the wildfires have increasingly been forced to turn to the state’s fire insurance program, California FAIR Plan, intended to be used as a last resort.
Its insurance policies generally have higher rates and less coverage than private insurers.
Around half a million Californians are relying on the FAIR Plan, which has doubled in size over the past five years.
COVERAGE CONTROVERSY
The U.S. Sun reached out to State Farm, Nationwide, and Farmers Insurance to gain insight into their stance regarding the wildfire outbreaks.
State Farm stopped accepting new fire insurance applications in California in May 2023 and announced it would not renew 72,000 policies in the state on a rolling basis.
“Our priority right now is the safety of our customers, agents and employees impacted by the fires and assisting our customers in the midst of this tragedy,” a State Farm spokesperson told The U.S. Sun in a statement.
The spokesperson also shared additional resources, including a fact sheet on the insurer’s presence in California and a statement on the issues the company has faced in The Golden State.
Nationwide Private Client, a subsidiary of Nationwide, announced last year its plans to stop renewing all its homeowners insurance policies in California by June 2025, per the San Francisco Chronicle.
“Our hearts go out to all those impacted by these devasting fires. Nationwide is here for our members as they work to recover,” a Nationwide spokesperson shared with The U.S. Sun.
“We have been reaching out to our employees, insurance agency partners and our policy members in affected areas with information on steps to stay safe and file a claim. Nationwide is ready to help our customers. Claims teams are on standby to deploy to the heaviest impacted areas as soon as conditions allow.
“An important part of Nationwide’s heritage rests in California. We’ve been part of the community in the state for nearly a century, and California will continue to be an important market for us.”
The spokesperson also urged customers impacted by the wildfires to take pictures of the damages to their property when it is safe to so do.
They also suggested that Nationwide customers safely complete temporary repairs if they can, and save their receipts for future review.
The spokesperson shared that customers can get 24/7 assistance with filing their claims at Nationwide.com or by calling the claims call center at 1-800-421-3535.
Similar to State Farm and Nationwide, Farmers began limiting coverage in the state in 2023.
Later that year, its subsidiary Farmers Direct Property and Casualty Insurance Company completely withdrew from California.
Farmers also responded to The U.S. Sun, sharing a company statement via email.
“As you can imagine, right now we are focused on assisting customers impacted by the devastating fires and strong winds affecting Southern California. Local residents are encouraged to remain vigilant and be prepared to adhere to guidance provided by local emergency officials. Specially-trained members of the Farmers Catastrophe Response Team have already begun to provide assistance to customers,” said the Farmers representative.
They added that Farmers customers can file a claim by calling their agent, calling the 24-hour claims center, or using their Farmers mobile app.
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