Kristy and Michael Daneau breathed a deep sigh of relief when they found the home for sale on a heavily wooded lane in northern California’s Butte county five years ago. Everything lined up.
The owner was looking to sell only to survivors of the Camp fire. A few months earlier, the couple and their four daughters had lost everything in the blaze, save for their four dogs. Kristy barely escaped the fast-moving flames.
Property values shot up after the 2018 fire destroyed 14,000 homes overnight, and the three-bedroom in Cohasset, a tiny settlement in the foothills, was the only home in their budget with the payout they had received from their home insurance.
The property got them out of the crowded fifth-wheel trailer they were sharing. And they felt lucky to be in the close-knit community where they could see a sky full of stars at night and deer roaming in their backyard.
The Daneaus never expected that living there would end up costing them everything.
In late July, their new home perished in the Park fire, a fast-moving blaze that exploded through Butte and Tehama counties in the last two weeks. This time, they weren’t insured.
The couple’s hardship has been shaped by a series of disasters: the state’s catastrophic wildfires, a housing shortage that has pushed people into rural communities that are more affordable but carry a high fire risk, and an insurance crisis.
As California sees increasingly destructive blazes, with the potential of more to come, insurers have increasingly dropped customers or stopped writing new policies in some areas in the state entirely. That has forced residents to seek out pricey coverage under the Fair Plan, California’s insurer of last resort, or go without coverage and jeopardize the assets they have spent their lives building.
“We had never intended on living in a house without insurance, especially given the fact that we knew how important it was. That’s what saved us from complete devastation in the Camp fire,” said Michael.
“Now we are left with nothing. It’s like we are having to start over again”.
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When the Camp fire tore through Paradise on a warm and windy morning in November 2018, the Daneaus were living with their four daughters and pets. They had married a few months earlier after spending nearly a decade together, and had already navigated more than their fair share of challenges. Just a few years into their relationship, Michael was diagnosed with a rare kidney disease that required a transplant.
The family loved living in Paradise, where Michael grew up, and home insurance costs were reasonable at about $90 a month – the cost of a date night, he said.
The fire leveled Paradise, killed 85 people, and upended the lives of tens of thousands of residents.
Their insurance saved them, the couple said. After living in a fifth-wheel trailer for months, they were able to purchase a home in the forested community of Cohasset with their settlement.
It felt like nothing short of a miracle. In the aftermath of the Camp fire, the housing market boomed in Butte county, which had already had a housing shortage before the fire. People who had lost everything were desperate to buy, and prices jumped. “Everything was getting snatched up,” Kristy said.
The owner of their home was selling it fully furnished to survivors of the Camp fire, so that they would have everything they needed to start again. They knew the area was at risk for fires, but it was all they could afford, Kristy said, and would allow them to remain in an area where they have deep roots.
By the time the family moved in, they couldn’t find home insurance with fire coverage. Some companies had already stopped writing new policies for homes in the region, so the couple sought out the Fair Plan, which guarantees coverage but is often more expensive. Their first year came in at around $7,000, they said.
Insurance had been an issue in the region in the past, said Doug Teeter, a Butte county supervisor. When he was elected in 2012, there were certain areas of the county where some insurers would pull out, but there was always another provider that would step up, he said. That’s no longer the case.
As California saw increasingly destructive fire seasons – in 2017, the fire siege largely concentrated north of the Bay Area that killed 44 people and destroyed nearly 9,000 structures, and the Thomas fire that destroyed more than 1,000 in southern California; the 2018 season that wiped out 24,000 structures and killed 100 people; the 33 people killed and 11,000 structures lost in 2020; the destruction of Greenville the following year – affordable home insurance in many parts of the state became all but impossible to find.
Rising inflation significantly increased the costs of rebuilding.
“The costs insurance companies were facing in terms of reconstruction were going up faster than they could raise rates,” said Michael Wara, a senior research scholar at Stanford’s Woods Institute for the Environment. “The loss was just accumulating and accumulating with not an expectation of an end in sight.”
Insurance companies were not allowed to raise rates to a degree those companies believed that they would be be paying out in losses, Wara said.
“Imagine if the grocery store had to buy strawberries for $10 a basket, but for whatever reason there was a law that said they could only sell them for $6,” Wara said. “They are not going to want to be in the strawberry business. That’s kind of what we’re seeing with the insurance market”
And the system itself is not designed to handle a disaster in which 10,000 houses burn down in one night, he said.
Last year, State Farm, the largest provider in California, announced it would stop selling new home policies in the state. Allstate, another major player in the state’s insurance market, had made the same announcement months earlier.
The insurance market in California right now is highly unstable, Wara warns. “We’re kind of teetering.”
Climate crisis-fueled disasters across the US are creating chaos in the industry. In hurricane-prone Florida, insurance premiums have soared, major insurers have stopped writing new policies and residents have been forced to seek coverage through the state’s not-for-profit insurer of last resort.
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As homeowners get dropped by their providers or are unable to obtain coverage, an increasing number are turning to California’s Fair Access to Insurance Requirements (Fair) plan, which offers basic coverage to those who can’t get insurance via the traditional marketplace.
The Fair plan was created in the 1960s in response to the redlining that occurred after the Watts riots, when insurance companies wouldn’t insure in parts of Los Angeles because of the risk of riots, Wara said. The mid-2000s saw more and more rural policies added.
Fair Plan dwelling policies have increased by 164% since 2019.
The Daneaus had two policies, traditional home insurance and the Fair plan for fire coverage. But as the costs rose and their settlement money dwindled, they could no longer afford to keep up with the policy. The pandemic had been hard on the family, as Michael was immunocompromised and the couple could not work during that time.
Costs jumped from $7,000 the first year to $10,000 the following, and by the third year it was up to $12,000, which they were expected to pay in three large installments back to back.
“At that point it just became unattainable,” Michael said.
They weren’t alone. An informal social media poll of Cohasset residents suggests that half of those who lost their homes didn’t have insurance, Teeter said.
Some who lived in the area and previously had insurance were dropped by their providers and were unable to find another insurer who would sell them a policy.
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In response to the crisis, California’s insurance commissioner has proposed major reforms that would in the long run stabilize the system, Wara said, including creating a process to allow more prompt approval of insurers’ requested rate hikes, permitting the use of catastrophe models in determining rates, and allowing the cost of reinsurance – insurance for insurance companies – to be included in rates.
With those changes, insurers will be required to again write coverage in high-risk areas, bringing people on the Fair plan back to the market and giving priority to those following wildfire safety regulations. The anticipated bill increases would be difficult on budgets, Wara said, but better than paying the even higher costs associated with the Fair Plan, which has written more coverage than it has assets to cover.
“It’s a substantive move in the right direction,” he said.
But for many survivors of this year’s major wildfires in California, the proposed changes are coming too late.
The Park fire, which exploded through tinder-dry grasslands and rugged canyons, consuming more than 400,000 acres (162,000 hectares), has destroyed more than 600 structures. In Paradise, which was briefly under an evacuation warning due to the blaze, some residents who had lost their insurance said they wouldn’t leave if the fire approached.
Steve Ferchaud, who moved back to Paradise last year, was dropped by his insurer a few months ago. “That’s why I decided to stay. I had hoses ready,” he said.
The county has tried to provide assistance to residents navigating the insurance crisis. People are feeling overwhelmed, confused and angry, said Lauren de Terra with the Butte county Fire Safe Council.
“There are people in Paradise who are in a brand new house [with] little to no hazards near them. There’s people who have followed every recommendation for defensible space and home hardening, and their insurance is still thousands of dollars, making it unaffordable to get up here and to rebuild,” De Terra said.
Through her work with the council, De Terra helps people establish so-called “firewise” communities, a program in which residents organize to reduce risks in their areas and improve wildfire preparedness. Participating in the program guarantees an insurance discount between 2 and 10%, de Terra said.
The Butte county Fire Safe Council has also done key work to help communities in the region prepare and recover from wildfires, including prescribed burns. The group worked extensively in Cohasset, where the Daneaus lived, before the fire and an area in which they did extensive fuel reduction was largely spared from the flames, said Taylor Nilsson, the council’s executive director.
“It reinvigorates us while we’re feeling the grief and the sadness of what we’ve lost, [and] emphasizes the importance of what we do working with partners to make sure that this work happens.”
Wara points to these kinds of efforts in the county to show there are things that can be done to reduce losses before insurance is ever needed.
“It’s an important part of the story of this fire,” he said. “The bottom line for California is we are better off if we don’t have to have that financial engineering conversation because we’ve done things to reduce the risk of structures burning.”
The Daneaus don’t know what’s next for them. They intend to stay in the region and start over, yet again. Like so many, they have turned to crowdfunding for support.
They miss hearing the crickets and wild animals, and sleeping in a bed of their own. They hope to see solutions to the insurance crisis, because more communities will burn, Michael said.
“Everybody should have the right to live the best they can within their abilities and not have to be a wealthy person just to protect your assets. Not that our assets were even that much,” he said.
“But to us it was home,” Kristy added.
