By Jean Eaglesham and Laura J. Nelson
Glenn and Lorraine Crawford paid about $500 a month to insure their home in Agoura Hills northwest of Los Angeles when they bought it in 2012.
Now, State Farm is charging them more than seven times as much for coverage that wouldn’t cover the cost of rebuilding the home.
The Crawfords say they have little alternative but to pay the bill that arrived last month, which, at more than $44,000 a year, is almost as much as their mortgage bill. The only other insurer willing to cover their home, Lloyd’s of London, quoted them $80,000 a year.
More than a year after infernos tore through Los Angeles County, millions of Californians like the Crawfords are suffering through a home-insurance crisis that has rolled on for years with eye-watering rate increases, canceled policies and rejected claims.
The state’s plan to fix things—including approving big rate increases to spur insurers to compete for customers—has so far failed to do the trick.
Two of the biggest insurers, State Farm and Allstate, aren’t selling to new customers in the state, despite getting double-digit rate increases approved for their existing policyholders. A third, Farmers Insurance, has committed to cover more homes in fire-prone areas, but only a fraction compared with the drop in its overall number of policies since the crisis began.
The crisis has heaped more pressure on the state-chartered Fair Plan, an insurer of last resort for desperate homeowners. The number of its bare-bones policies has more than doubled in the last two years. Thousands of insurance claims from the devastating Los Angeles fires are bogged down in litigation or formal complaints.
The state’s elected insurance commissioner, Ricardo Lara, says improvements will take time. “Just as it’s taken us years to get here, it’s going to take us years to get us out of here,” he said in an interview.
The insurance dysfunction has spread to California’s housing market, the country’s biggest and most expensive, with nearly one-in-five real-estate agents reporting a canceled sale last year because of clients unable to find affordable insurance, according to a survey by the trade body California Association of Realtors.
Many homeowners are dealing with insurance problems following the Los Angeles County fires. ELIJAH HURWITZ FOR WSJ
For the Crawfords, keeping their 7,000 square foot house insured has been a nightmare. The Woolsey Fire in 2018 burned to the edge of their neighborhood. To save money on soaring premiums after the fire, the couple eliminated jewelry coverage from their insurance.
Then last year, burglars stole more than $250,000 in family jewelry, cutting into the Crawfords’ gun safe. The haul included gold jewelry from Lorraine Crawford’s grandmother; a pavé ring and a Tiffany-style necklace that Lorraine had made with tiny diamond chips inherited from her mother; and World War II pilot’s wings that belonged to Glenn Crawford’s grandfather.
“We’re not uber rich. We’re not Kardashians,” Lorraine Crawford said, sitting on her secluded back deck surrounded by trees. She said they are afraid that the $44,000 yearly insurance bill is imperiling their retirement plans.
The roots of California’s insurance crisis go back years. The state’s tough rate caps kept premiums low. But home insurers eventually balked, saying they couldn’t charge enough to cover rising wildfire and other losses, made worse by climate change and development. Insurers didn’t renew tens of thousands of policies, especially in fire-prone areas.
California’s uphill battle to draw insurers back could prove a template—or cautionary tale—for other disaster-prone states. New rules implemented last year, for instance, require home-insurers in the state to pledge to sell new policies in high-risk wildfire zones, in return for allowing them to charge higher rates.
“They’re committed to no longer abandoning these communities,” Lara said. “No other state has that guarantee.”
California Insurance Commissioner Ricardo Lara is trying to revive the state’s home-insurance market.CARLIN STIEHL/LOS ANGELES TIMES/GETTY
Critics say insurers don’t appear to face sanctions if they fail to meet their sales targets in high-risk areas. And the targets set so far suggest that it will take many years just to claw back the sharp fall in privately sold policies during the crisis.
“Consumers are no better off than they were at this point last year,” said Carmen Balber, executive director of consumer group Consumer Watchdog. “We have done everything we could to coddle the insurance industry, and it hasn’t moved the needle.”
As part of a request for a 6.99% rate increase, Farmers, the second-biggest home-insurer in the state, pledged to add at least 5,596 policies in high-risk areas by September 2028. That is less than a 10th of the 59,806 reduction in Farmers’ total number of California home-insurance policies in the previous two years, according to a Consumer Watchdog analysis.
A spokesman for Farmers said there “could be a variety of reasons” for the drop in policy count, in addition to non-renewals. The insurer continued selling new policies throughout the crisis, unlike many of its rivals, he added.
Others continue to shun the state despite winning big concessions. California regulators approved a 34% rate increase for Allstate in 2024. Yet it has no “growth aspirations” in California home insurance, Chief Executive Tom Wilson said last year, adding that it would take time to fix the market. A spokesman said that remains Allstate’s position.
Lara, the regulator, appears exasperated by some insurers’ reluctance to re-enter the market, despite getting pretty much everything on their wish list. “I’m constantly in a state of frustration,” he said. “That is an understatement.”
His push to revive the market is being complicated by fallout from the cataclysmic L.A. fires. The disaster, the world’s most expensive fire ever, landed insurers with some $40 billion of losses.
The state’s Fair Plan imposed a $1 billion levy on private insurers, who took advantage of a recent rule change to pass a chunk of the cost directly onto policyholders across the state. The Fair Plan, which offers basic fire insurance for homeowners who can’t get coverage elsewhere, is seeking a 35.8% rate increase to buoy its strained finances.
The disaster also almost felled California’s biggest home insurer, State Farm General. Lara last year backed an emergency 17% rate increase to keep the State Farm subsidiary afloat. “We’re on the Titanic, and we see the iceberg,” one of Lara’s lawyers told a hearing last year.
But its request for a further 11% hike has been delayed, amid scrutiny of its treatment of claims by L.A. fire survivors. A State Farm spokesman said it is “focused on practical solutions that expand availability and improve affordability.”
The thousands of homeowners hit by last year’s blazes complain that insurers, including the state’s Fair Plan, have been slow to get people back on their feet.
Alyson Granaderos, a makeup artist for film and television, doesn’t feel safe to return to her Altadena home with her husband and their two children, ages 12 and 5.
Their house, a few blocks from the foot of the San Gabriel Mountains, survived. But the home still has no power, and tests revealed elevated levels of lead, a toxic byproduct of smoke damage from urban wildfires, Granaderos said. Their insurer, the Fair Plan, in October denied their claims for remediation, telling them in a letter that the policy covers smoke-damage claims only where there was “direct physical loss observed.”
A spokeswoman for the Fair Plan declined to comment on the specific claim. But she said the Fair Plan deeply empathizes with wildfire survivors and is committed to handling each claim with compassion, integrity and full compliance with all laws.
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Granaderos, whose family is renting in nearby Pasadena, has joined a lawsuit seeking compensation from the Fair Plan over its handling of smoke-damage claims.
“You feel so defeated,” she said. “Where are you going to live next? How are you going to keep the ship moving forward? How are you going to get back home?”
