When James Borow realized last Tuesday that his Palisades house was on fire, he was 300 miles away in Las Vegas at the Consumer Electronics Show. The power was out at his house but a friend suggested he remotely turn on his Tesla and see if the cameras showed anything.
From the car camera, he watched in a panic as his house burned. As he drove home from Vegas to LA, he called his parents and told them: “You’ll see it on the news tomorrow, but the house is totally gone. I just watched it.”
Borow’s first concern was securing a place for his family to live. His second was insurance. Three months ago, he had received a letter from his insurer, State Farm, that his fire policy wasn’t being renewed. The letter advised him to get fire insurance through California’s Fair plan, created by lawmakers 50 years ago to help people who had no other options for insurance. “The end result was that my insurance increased 400%,” says Borow. “It was expensive, but it wasn’t complicated.”
Borow was one of 1,626 State Farm customers in the Palisades neighborhood whose fire insurance was not renewed at the end of 2024, according to California’s insurance office. They represented about 70% of State Farm’s market share in Pacific Palisades, according to the San Francisco Chronicle.
Some of the people dropped by insurance, like Borow, found insurance with Fair. For others, the steep prices, or certain fireproofing requirements issued by new insurers, were prohibitively expensive.
Francis Bischetti told the Los Angeles Times that Farmers Insurance, another major provider, had told him last year that his homeowners insurance for his house in the Pacific Palisades was going to increase from $4,500 to $18,000, which was out of reach for his budget. He was unable to get a Fair plan because he would have to cut down 10 trees around his house, another huge cost, he said. His house burned down, and he had no insurance.
Finding fire insurance for homes in areas with high fire risk is a challenge that will only increase for Californians, experts predict. Michael Coffey, an insurance defense litigator who works on large, global insurance cases, says he expects more insurance companies to leave the state – forcing prices up for everyone.
That will force more Californians into heartbreaking choices: pay up, live in a home that’s uninsured, or move elsewhere.
More than 450,000 California homeowners got their insurance through the Fair Plan in 2024 – more than double the number in 2020. Even for those who were able to afford the coverage, uncertainty surrounds the plan.
As of last Friday, the Fair Plan had just $377m available to pay claims, according to the office of the senator Alex Padilla, and policies only cover basic property damage within a $3m range.
It’s too soon to know if Fair has enough reserves to pay out the billions it may soon owe. Last year, Victoria Roach, president of the Fair Plan, told the California legislature that the system was only one large event away from insolvency. “There’s no other way to say it, because we don’t have the money on hand [to pay all the claims] and we have a lot of exposure.”
“Since the Fair Plan is run by the government, I’m sure they’ll try to craft the remedy,” Coffey said. “But unfortunately, that cost is going to be borne by taxpayers, either statewide or federally.”
In the short-term, the Los Angeles county insurance commissioner, Ricardo Lara, said he has used his moratorium power to prevent insurance companies from canceling or not renewing home coverage for Los Angeles wildfire victims in affected zip codes over the next year.
In the longer term, the state has been looking for fixes as its insurance market is overburdened by the devastation caused by climate crisis-fueled disasters. A new regulation that took effect this month allows insurers to consider the climate crisis when setting their prices – which many insurance companies had said was a reason they pulled out of the state’s insurance market. California previously did not let insurance companies factor in current or future risks when deciding how to price their policies.
Coffey says that the government cannot be a blind insurer of people’s homes. “That’s not something the government can be in the business of,” he says. “It’s too expensive and it would overwhelm the system economically.
“If people thought it was expensive now to live in California, I think they should understand that it’s priced based upon the risks,” Coffey says. “And California has a lot of insurance risk between earthquakes and wildfires, so you’re gonna have to pay a lot more.”
California is not alone – across the country, average homeowners insurance premiums have increased by more than 30% between 2020 and 2023, according to the Brookings Institution, due increases from climate-linked disasters as well as swelling home building costs. In Florida, the government-run Citizens Property Insurance Corp, their version of Fair, is one of the 10 largest home insurers in the state.
Borow is hopeful that Fair will pay out for his claim, and that he may get some supplemental funds from State Farm.
Coordinating between State Farm and Fair has been extremely difficult, he said. “There’s just a ton of unknowns. And so every question you have on the phone, the representatives are like, I honestly don’t know. I’m trying to find out the answer. So no one knows what the hell is going on.”
Getting the companies to pay out on claims could be a challenge in California even before the fires. In 2023, three home insurance companies in the state declined nearly half their claims – higher than the national average. LA-based Farmers Insurance topped the list, denying about 50% of claims for payment, according to reporting from the LA Times.
Borow hopes he eventually will get to rebuild his home in the Palisades – “hopefully, four years from now, we will have a house again. I would say that’s the best-case scenario.”
