Six months after a wind-driven wildfire killed 30 people and destroyed thousands of homes and businesses in and around Los Angeles, the scene of Altadena and the Pacific Pallisard is still horrifying and blocked after a burnt-out house and business block.
However, there are often minor signs of regeneration from workers who have the property owners cleaned lots or simply repaired damaged homes. Sometimes you can see the house being rebuilt. Owners were able to navigate the complex permitting process and, importantly, get insurance.
“The insurance situation is very stable considering everything that actually happened,” said Scottwilk, an independent insurance agent and owner of TWFG Insurance, owner of Santa Clarita, California.
That doesn’t mean that premiums haven’t skyrocketed after wildfires. Online marketplaces guarantee projects that California premiums will rise 21% this year, even in sectors far from Los Angeles.
“That kind of event in California has a huge impact on how much premiums are projected and risen,” said Chase Gardner, Data Insights Manager at Insurify. He added that when insurance companies “when they pay more than they bring in premiums, the more they need to raise the price.”
Image of a drone of Alphabet Street in the Pacific Ocean, destroyed by a Palisade fire. Photographed on Tuesday, January 28th, 2025.
Myung J. Chun | Los Angeles Times | Getty Images
In fact, insurance forecasts premium growth in all 50 states this year, an average of around 8%. California’s growth is not at its biggest. That distinction belongs to Louisiana, with premiums projected to rise 28%. The phenomenon is not limited to coastal states. Iowa and Minnesota are considering double-digit increases.
“We’ve seen a lot of experience in real estate and finance,” said Benjamin Keys, professor of real estate and finance at the University of Pennsylvania Wharton School. “We’re looking at states like Vermont, where there are rising costs associated with recent floods. We see states like Colorado, which has historically been in the middle of packed states in terms of insurance costs.
Because premiums are regulated by state, in theory, companies cannot use disasters in one state to justify rising rates in another state. But in reality, experts say it has a ripple effect as businesses seek more aggressive premium increases in some states and try to balance risks by reducing exposures by not updating their policies.
“These insurance companies are national companies, and this could have an impact on something like their entire business,” Gardner said. “Even if it’s beneficial in 10 states, if they’re really unprofitable in one state, it can affect how they think about their business and how they think about attracting new customers.”
Premiums vary widely from state to state, with Florida at the highest average of $15,460 as expected by insurance, but the state’s increase appears to have been eased after adopting a series of reforms. Despite recent increases, the lowest average premium is $1,248 in Vermont. Even with a 21% increase this year, California’s forecast average premium of $2,930 is less than the national projected premium of $3,520 for insurance.
Disparities between states can be a factor in competitiveness. Companies deciding where to place or expand will frequently consider the cost of living for their future employees. Therefore, CNBC uses premium insurance data as a component of the business cost category for the top states of America this year, and uses it as a component of the business cost category.
“Home insurance is just a bigger and bigger monthly home payment for people,” Gardner said. “I think you’re really eating the idea that homeownership is a really stable, cost-cap long-term bet, especially if you live in a state like Florida, California, or even Texas.”
Experts expect the rise to continue as storms and other natural disasters become more severe and housing values and replacement costs continue to rise.
Wilk said California’s worst crisis may have ended, but there will be more sticker shocks in the future.
“There’s a very long process for rate changes to go through, sometimes it can take 12-36 months,” he said.
The state’s largest insurance company, the state’s Farm, reduced the number of California policyholders by thousands just before the January fire, and won state approval in May with a 17% emergency rate hike. However, the company is seeking a 30% increase and has already petitioned state regulators to approve the remaining 13%.
Wilk said there are still affordable options from small California airlines or from so-called “unadvertised” companies that can sell their policies to California homeowners independent of state regulators.
He said many of his clients are happy to have insurance.
“A pre-insurance crisis early in my career. If a customer rate rose $5 a month, I could hear about it and hear complaints about it,” he said. “Now people are excited when their policies are updated and they are still in force.”
