California residents have long been struggling with insurance companies that no longer want to protect their homes, and thousands of policies — including around 1,600 in the now-devastated Pacific Palisades neighborhood — were dropped in the months leading up to this week’s wildfires.
Out of the approximately 8,900 occupied housing units in Los Angeles’s Pacific Palisades, nearly 80 percent are owner-occupied, according to 2022 U.S. Census data obtained by Point2Homes.
State Farm dropped a staggering 1,600 home insurance policies in the neighborhood in July, equivalent to about 18 percent of the owner-occupied homes, California Department of Insurance (CDI) spokesman Michael Soller told CBS News on Thursday.
An August 2024 analysis of insurance data conducted by CBS revealed that State Farm also dropped over 2,000 policies in two additional LA zip codes which include the neighborhoods of Brentwood, Calabasas, Hidden Hills and Monte Nido.
Throughout all of California, State Farm discontinued coverage for 72,000 homes in 2024, and over 100,000 state residents have lost their home insurance since 2019, a San Francisco Chronicle analysis revealed.
The Pacific Palisades fire, which sparked on Tuesday, is set to become “one of the state’s costliest” ever, according to NBC News.
The number of damaged or destroyed structures in the upscale neighborhood is “in the thousands,” Los Angeles Fire Department (LAFD) Chief Kristin Crowley said during a Thursday press briefing.
“It is safe to say that the Palisades Fire is one of the most destructive natural disasters in the history of Los Angeles,” she added.
WATCH — Breitbart News reports on the fire:
Actor James Woods, whose Palisades home was one of the thousands that burned, wrote on X that “one of the major insurance companies canceled all the policies in our neighborhood about four months ago”:
The Palisades blaze, one of five main fires currently raging across Los Angeles, has burned through an astonishing 17,234 acres with no containment as of Thursday morning.
According to a J.P. Morgan analysis cited by NBC, the Palisades fire has burned through a particularly “affluent residential area,” with a median home price exceeding $3 million.
The analysts estimated that the insured losses from just that blaze could reach up to $10 billion — and that is not counting the losses from the other four significant fires in the area.
State Farm officials claimed that their “No. 1 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,” in an email to CBS.
As Breitbart News reported in 2023, many insurance companies stopped selling new policies in California “because of the increased risk of wildfires and the rising costs of construction in the state — and because the state’s regulators will not allow it to price new policies based on future anticipated risk, only on historical risk.”
Due to private insurance companies canceling policies throughout the state, homeowners have been forced to rely on California’s Fair Access to Insurance Requirements Plan, or FAIR Plan, if they want to be insured at all.
Newsweek noted that the FAIR Plan is an “insurer of last resort.”
According to data from the state insurer, roughly 1,400 of the Palisades’ 9,000 homes were covered by the FAIR Plan in 2024 — more than quadruple the number covered in 2020.
Insurance Information Institute spokesperson Janet Ruiz told NBC Bay Area in September 2024 that it is simply unrealistic for insurance companies to hold as many policies as there is a demand for in California.
“California is the fourth-largest insurance market in the world,” Ruiz said. “We want to be here, we want to be a part of it, but we do need to make some profit.”
“Companies are having to manage how much they can insure,” she added.
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