As Californians already face significant challenges finding home insurance, the fires ravaging Los Angeles County could make it even more difficult and costly to insure properties in the future.
Deadly fires erupted beginning Jan. 7, causing at least 11 deaths, leading to the ongoing ordered evacuation at one point of more than 180,000 individuals, with another 200,000 warned to get ready for possible evacuation.
More than 10,000 buildings are damaged or destroyed across the county, according to the latest estimates, with the number expected to rise as fires are minimally contained, in what some are describing as one of the most costly natural disasters in American history. AccuWeather estimates economic losses from the fires to reach up to $150 billion.
As of the latest tally on Jan. 9, the Pacific Palisades fire destroyed nearly 6,000 structures, including oceanfront mansions in neighborhoods north of Santa Monica, where homes sell for between $7 million and $20 million, with an average price of more than $3 million across the city.
The affluent area is made up of primarily white-collar workers, according to Cal Fire demographics data, which shows slightly fewer than half of the structures affected by the Palisades Fire were built since 1970, and about 12,000 are older.
Videos of the aftermath show businesses and homes leveled by fire, with the blocks of some neighborhoods completely demolished by the inferno.
State Farm non-renewed approximately 1,600 policies in the region in 2024, of approximately 30,000 homeowners and 42,000 apartment policies it dropped statewide, citing rising costs and risks.
“This decision was not made lightly and only after careful analysis of State Farm General’s financial health, which continues to be impacted by inflation, catastrophe exposure, reinsurance costs, and the limitations of working within decades-old insurance regulations,” the company said in a statement.
“State Farm General takes seriously our responsibility to maintain adequate claims-paying capacity for our customers and to comply with applicable financial solvency laws. It is necessary to take these actions now.”
Approximately 6,000 structures were lost in the Eaton Fire, as of the most recent count on Jan. 10. The East Altadena and Hasting Heights neighborhoods sustained significant damage.
The average value of homes in the area is approximately $1.4 million, according to the online real estate listing firm Zillow.
Ricardo Lara, commissioner of the state’s Department of Insurance, issued a one-year moratorium on Jan. 10, preventing non-renewals and cancellations for households in and adjacent to the fire sites.
“I am using my moratorium powers … so people don’t face the added stress of finding new insurance during this horrific event,” he said in a statement. “I am working on all fronts to make sure wildfire victims get the benefits they are entitled to, and they get it as soon as possible.”
Insurance Market Stability in Question
With losses mounting, California’s already precarious insurance market could become more challenging if insurers become more hesitant to write policies.
The state is going through what lawmakers and other elected officials have deemed a “genuine crisis” that is affecting millions of Californians.
Supervisors in counties from across the state passed resolutions last year calling for a state of emergency due to a lack of affordable insurance.
“At this point, it’s not an exaggeration to say the state’s facing an insurance crisis of both affordability and availability,” Ray Mueller, San Mateo County supervisor, said during a board meeting on Oct. 8.
Seven of the 12 largest insurers, including State Farm which represents about 10 percent of the market share, according to Department of Insurance data, paused writing new policies since 2023.
A lack of availability has left many Californians with only one option, the so-called FAIR plan—an insurer of last resort financially backed by insurance companies.
In the event the plan goes insolvent, insurers are on the hook to cover the losses, with each company paying out based on market share—thus incentivizing limiting liability by reducing exposure, analysts said.
The number of homes insured with the FAIR plan skyrocketed in recent years—now totaling more than 450,000 policies—overwhelming staff assigned with managing calls, representatives with the state’s Department of Insurance testified to the Senate Insurance Committee last year.
Those stuck with the plans say they’re anything but fair, with some households paying as much as 500 percent more for less coverage.
Coverage was limited to $3 million per structure for residential homes, which could pose a problem for some homeowners in coastal areas impacted by fire where values far exceed the cap.
It is unclear how many homes affected by the recent fires were covered by the FAIR plan.
Regulatory Hurdles
Insurance companies have shied away from doing business in the Golden State because of strict regulations that limit rate hikes and stall application processes, Rex Frazier, president of the Personal Insurance Federation of California, told The Epoch Times.
He called for an expedited approval process and said the higher construction, labor, and reinsurance costs dictate the need for more expensive premiums.
Some of the largest insurers recently requested price hikes of 30 percent or more, and the insurance department is processing the applications.
“The problem is that the solution to the problem is going to be higher premiums, and people aren’t going to like that,” state Sen. Roger Niello, vice chair of the Senate’s Insurance Committee, told The Epoch Times.
The industry points to a challenging regulatory environment exacerbated by fire risk and inflation as reasons companies are reducing coverage in California.
Other points of contention for insurers are strict rules set in place by Proposition 103—known as the Insurance Rate Reduction and Reform Act—narrowly approved by voters in 1988 to oversee the industry after automobile insurance prices spiked.
“It’s a real issue,” Niello said. “And it’s a problem because we passed an initiative 30 years ago with an extremely small margin of victory … in a market and under circumstances that were completely different than they are now.”
Looking for Solutions
Insurance department officials have agreed that some of the regulations are inhibiting progress.
“Californians in every corner of our state are frustrated with outdated regulations and desperate for change,” Commissioner Lara said in a June 2024 press release. “We are addressing this crisis of insurance availability head-on. For the many Californians who live anywhere where wildfires are a threat, my strategy will increase their options while requiring insurance companies to take their wildfire safety actions seriously,”
He released new guidelines last year that will allow insurers to use models that will allow for higher pricing, and the cap on FAIR plan coverage is raised to $20 million per structure.
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To help reduce the number of homeowners relying on the FAIR plan, the new rules require insurers to increase the number of policies written in high-risk areas by at least 5 percent.
One policy analyst said removing government oversight and allowing a free market to determine pricing could be a more effective solution.
“Deregulation is a simpler answer. Hundreds of insurers could then freely compete for Californians’ business, with third parties informing consumers about each company’s financial status and claims-handling behavior,” Marc Joffe wrote in a December analysis for the Cato Institute.
“And there would be an added bonus: by eliminating the Department of Insurance, the state could reduce its 3 percent tax on insurance premiums, part of which funds the department, providing an immediate savings for consumers.”
Five Things New “Preppers” Forget When Getting Ready for Bad Times Ahead
The preparedness community is growing faster than it has in decades. Even during peak times such as Y2K, the economic downturn of 2008, and Covid, the vast majority of Americans made sure they had plenty of toilet paper but didn’t really stockpile anything else.
Things have changed. There’s a growing anxiety in this presidential election year that has prompted more Americans to get prepared for crazy events in the future. Some of it is being driven by fearmongers, but there are valid concerns with the economy, food supply, pharmaceuticals, the energy grid, and mass rioting that have pushed average Americans into “prepper” mode.
There are degrees of preparedness. One does not have to be a full-blown “doomsday prepper” living off-grid in a secure Montana bunker in order to be ahead of the curve. In many ways, preparedness isn’t about being able to perfectly handle every conceivable situation. It’s about being less dependent on government for as long as possible. Those who have proper “preps” will not be waiting for FEMA to distribute emergency supplies to the desperate masses.
Below are five things people new to preparedness (and sometimes even those with experience) often forget as they get ready. All five are common sense notions that do not rely on doomsday in order to be useful. It may be nice to own a tank during the apocalypse but there’s not much you can do with it until things get really crazy. The recommendations below can have places in the lives of average Americans whether doomsday comes or not.
Note: The information provided by this publication or any related communications is for informational purposes only and should not be considered as financial advice. We do not provide personalized investment, financial, or legal advice.
Secured Wealth
Whether in the bank or held in a retirement account, most Americans feel that their life’s savings is relatively secure. At least they did until the last couple of years when de-banking, geopolitical turmoil, and the threat of Central Bank Digital Currencies reared their ugly heads.
It behooves Americans to diversify their holdings. If there’s a triggering event or series of events that cripple the financial systems or devalue the U.S. Dollar, wealth can evaporate quickly. To hedge against potential turmoil, many Americans are looking in two directions: Crypto and physical precious metals.
There are huge advantages to cryptocurrencies, but there are also inherent risks because “virtual” money can become challenging to spend. Add in the push by central banks and governments to regulate or even replace cryptocurrencies with their own versions they control and the risks amplify. There’s nothing wrong with cryptocurrencies today but things can change rapidly.
As for physical precious metals, many Americans pay cash to keep plenty on hand in their safe. Rolling over or transferring retirement accounts into self-directed IRAs is also a popular option, but there are caveats. It can often take weeks or even months to get the gold and silver shipped if the owner chooses to close their account. This is why Genesis Gold Group stands out. Their relationship with the depositories allows for rapid closure and shipping, often in less than 10 days from the time the account holder makes their move. This can come in handy if things appear to be heading south.
Lots of Potable Water
One of the biggest shocks that hit new preppers is understanding how much potable water they need in order to survive. Experts claim one gallon of water per person per day is necessary. Even the most conservative estimates put it at over half-a-gallon. That means that for a family of four, they’ll need around 120 gallons of water to survive for a month if the taps turn off and the stores empty out.
Being near a fresh water source, whether it’s a river, lake, or well, is a best practice among experienced preppers. It’s necessary to have a water filter as well, even if the taps are still working. Many refuse to drink tap water even when there is no emergency. Berkey was our previous favorite but they’re under attack from regulators so the Alexapure systems are solid replacements.
For those in the city or away from fresh water sources, storage is the best option. This can be challenging because proper water storage containers take up a lot of room and are difficult to move if the need arises. For “bug in” situations, having a larger container that stores hundreds or even thousands of gallons is better than stacking 1-5 gallon containers. Unfortunately, they won’t be easily transportable and they can cost a lot to install.
Water is critical. If chaos erupts and water infrastructure is compromised, having a large backup supply can be lifesaving.
Pharmaceuticals and Medical Supplies
There are multiple threats specific to the medical supply chain. With Chinese and Indian imports accounting for over 90% of pharmaceutical ingredients in the United States, deteriorating relations could make it impossible to get the medicines and antibiotics many of us need.
Stocking up many prescription medications can be hard. Doctors generally do not like to prescribe large batches of drugs even if they are shelf-stable for extended periods of time. It is a best practice to ask your doctor if they can prescribe a larger amount. Today, some are sympathetic to concerns about pharmacies running out or becoming inaccessible. Tell them your concerns. It’s worth a shot. The worst they can do is say no.
If your doctor is unwilling to help you stock up on medicines, then Jase Medical is a good alternative. Through telehealth, they can prescribe daily meds or antibiotics that are shipped to your door. As proponents of medical freedom, they empathize with those who want to have enough medical supplies on hand in case things go wrong.
Energy Sources
The vast majority of Americans are locked into the grid. This has proven to be a massive liability when the grid goes down. Unfortunately, there are no inexpensive remedies.
Those living off-grid had to either spend a lot of money or effort (or both) to get their alternative energy sources like solar set up. For those who do not want to go so far, it’s still a best practice to have backup power sources. Diesel generators and portable solar panels are the two most popular, and while they’re not inexpensive they are not out of reach of most Americans who are concerned about being without power for extended periods of time.
Natural gas is another necessity for many, but that’s far more challenging to replace. Having alternatives for heating and cooking that can be powered if gas and electric grids go down is important. Have a backup for items that require power such as manual can openers. If you’re stuck eating canned foods for a while and all you have is an electric opener, you’ll have problems.
Don’t Forget the Protein
When most think about “prepping,” they think about their food supply. More Americans are turning to gardening and homesteading as ways to produce their own food. Others are working with local farmers and ranchers to purchase directly from the sources. This is a good idea whether doomsday comes or not, but it’s particularly important if the food supply chain is broken.
Most grocery stores have about one to two weeks worth of food, as do most American households. Grocers rely heavily on truckers to receive their ongoing shipments. In a crisis, the current process can fail. It behooves Americans for multiple reasons to localize their food purchases as much as possible.
Long-term storage is another popular option. Canned foods, MREs, and freeze dried meals are selling out quickly even as prices rise. But one component that is conspicuously absent in shelf-stable food is high-quality protein. Most survival food companies offer low quality “protein buckets” or cans of meat, but they are often barely edible.
Prepper All-Naturals offers premium cuts of steak that have been cooked sous vide and freeze dried to give them a 25-year shelf life. They offer Ribeye, NY Strip, and Tenderloin among others.
Having buckets of beans and rice is a good start, but keeping a solid supply of high-quality protein isn’t just healthier. It can help a family maintain normalcy through crises.
Prepare Without Fear
With all the challenges we face as Americans today, it can be emotionally draining. Citizens are scared and there’s nothing irrational about their concerns. Being prepared and making lifestyle changes to secure necessities can go a long way toward overcoming the fears that plague us. We should hope and pray for the best but prepare for the worst. And if the worst does come, then knowing we did what we could to be ready for it will help us face those challenges with confidence.
