Scrambling CA homeowners consider ‘going without insurance’


Ray Barrios of Brentwood is among 30,000 State Farm customers in California who have to find new fire insurance. Photo by Caleigh Wells.

Ray Barrios lives in one of many large, single-family homes that line the squiggly, narrow streets of Brentwood. The community is manicured. Planned. Developed. No “wildland urban interface” here. The flammable hills just north of this LA neighborhood that look like typical tinder – open dry grass or trees with dense undergrowth – feel far away.

Not far enough, according to the home insurance industry.

Barrios and many of his neighbors are among 30,000 State Farm customers in California who will begin losing their home insurance policies today. Most of the affected customers live in high fire-risk areas, which in Southern California includes parts of Woodland Hills, Pacific Palisades, Bel-Air, and Brentwood.

“I understand why the insurance companies are reacting this way, because we've lived through the actual fires,” says Barrios.

When he moved into his home in 2017 with his wife, two toddlers, and two doodles (Ralph and Barkley), fire risk really wasn’t top of mind. Many of the state’s largest and most destructive fires – Thomas, Woolsey, Camp, Mendocino, August Complex – hadn’t happened yet.

But then “within the first two years of moving into our house here in Brentwood, we actually had to evacuate three separate times due to wildfires,” he says.

State Farm is just the most recent company to shed risky homeowners. As wildfires get more common and more severe, insurance companies have started dropping policies en masse

More than a major inconvenience for the homeowners, it signals a reshaping of how – and where – we live in California.

Brentwood homeowner and State Farm customer Jonathan Tobis is considering paying off his mortgage and foregoing home insurance. Photo by Caleigh Wells.

Barrios has tried several other insurance companies recommended to him by his still-insured neighbors. They’ve all refused him. He has a broker looking around for him, but they haven’t found anything yet.

He has until September to come up with another plan. And his choices are slim.

There’s the truly bold option, being weighed by his neighbor Jonathan Tobis, whom State Farm is dropping later this month: “I have seriously considered going without any insurance,” he says.

Tobis has done the math, and an alternative policy would cost him roughly $10,000 per year, about four times what he pays now. 

But dropping home insurance is not that simple.

“I still have a mortgage on this house. And the mortgage companies won't let you go without fire insurance,” he says.

That means he’d have to pay off the mortgage. He bought the house 24 years ago, so that’s not off the table for him.

But Barrios won’t even consider it. He has only had his mortgage for seven years.

Which means he might be stuck with the California FAIR Plan.

“I know that’s the option of last resort,” Barrios says. 

The FAIR Plan has been around since the 1960s. It’s a fire insurance policy guaranteed by the state if nobody else will provide one. It’s designed as a stopgap safety net to keep people in their homes until a traditional insurance company will carry them again. 

“The FAIR Plan is limited coverage at a higher cost,” explains California Deputy Insurance Commissioner Michael Soller. “The FAIR Plan covers fire damage, smoke damage, and internal explosion. That means if you have a basic FAIR Plan, you don’t have coverage for liability.” 

Moreover, Soller says, “If you're on traditional insurance and your insurance company drops you, and you have to go to the FAIR Plan because no one else will write you a policy to have that coverage that you used to have, you have to buy a separate policy at a separate cost.”

As climate change makes wildfires more frequent and intense, insurance companies are less willing to insure homes in high fire risk areas. As a result, in the past five years, the number of FAIR Plan policies has doubled to more than 365,000 customers. So it’s not just a stopgap anymore. 

Soller says that’s a problem: “We have to get people off the FAIR Plan and back into traditional insurance. And we have to make people safer. And those two things work together.”

Soller says the answer is making it easier for residents to harden their homes – clearing brush, replacing old fixtures and anything else that makes houses flammable. That will make homes less vulnerable to fire and more attractive to insurance companies again.

State Farm wouldn’t comment for this story, but Rex Frazier, president of the Personal Insurance Federation of California, says that still isn’t enough. “If you want [insurance companies] to robustly serve a place like Tuolumne County that's just forested and dry, or the San Bernardino Mountains, where you have a bark beetle infestation and the fire conditions there are shockingly scary … they're going to lose more money than they make. And ultimately, they're going to be unable to stay solvent and keep their promises.”

He says until California makes it easier to raise insurance rates, State Farm can’t afford to cover these houses anymore. So, they triage. Cutting the riskiest and priciest homes saves the most money.

Frazier says when insurance companies have to cut their risk, they triage by eliminating policies for the riskiest and most expensive homes, like those in Brentwood. Photo by Caleigh Wells.

But questions about insurance costs and accessibility for individual homeowners sidestep an even bigger question: Are these high fire risk areas too dicey to live in anymore?

“The system is not ready for how to figure out if a property is economically unsustainable from a climate perspective,” says Marty Walters, a consultant who helps people manage recovery after a massive loss. 

She says wildfire is not like sea level rise, which brings flood risk slowly to predictable places and then remains a constant problem. “If you're having entire communities destroyed by wildfire, there's no iteration there at all. It's a light-switch effect,” she says.

That makes it tempting for both insurers and homeowners to limp along, hoping this won’t be a catastrophic year. But neither of them — nor state agencies — are talking about whether to relocate millions of people in the midst of a statewide housing crisis. 

“There's no analysis being done to really think about it objectively. Because that's not the way our world runs, unfortunately," Walters says. “I laugh at myself because I do all of this hazard risk management, and I live in both a flood zone and fire zone.”

Her neighborhood in a small town northeast of Sacramento is a lucky, unscathed patch on the edge of the Dixie Fire burn scar. It’s really vulnerable. 

And yet, she won’t leave.

Her three sisters live in town. Plus, she’s the primary caregiver for her 88-year-old mom, who lives across the street.

“Moving at this stage of her life would be a huge impact on her. … It would be very hard on me, and I know it would be very hard on her,” she says.

Two of Walters’ sisters already lost their private fire insurance policies. They have the FAIR Plan. Plus, a home with only one pricey insurance option is a tough sell. So they stay put, hoping disaster doesn’t strike.

Tobis in Brentwood is semi-retired and has a second home up the coast. Even in a worst-case scenario, he’ll have a roof over his head.

“So if something catastrophic would happen here, I would just move to Santa Barbara and stop working,” he says.

His neighbor, Barrios, has fewer options and can’t easily leave. He has two young kids.

“I don't think I really have a choice. Just given where the housing market is, and where interest rates are, a lot of people, us included, are locked into their homes,” he says.

After so much practice running from wildfires, he’s confident about his family’s ability to safely evacuate. Plus, he says, his stuff is just stuff. Wildfires don’t worry him that much.

“It's more the worry financially of being able to insure the home that bothers me,” he says.



Caleigh Wells