Two lawsuits allege that major insurance companies coordinated to drop coverage in wildfire-prone California areas, pushing homeowners onto a costly, state-backed insurance plan.
In short:
- A group of homeowners filed a lawsuit claiming insurers like State Farm conspired to stop issuing policies in high-risk wildfire zones, including areas devastated by Los Angeles-area fires in January.
- The FAIR Plan, a last-resort insurance option with limited coverage and high premiums, now covers more than 555,000 homes — more than twice the number from 2020.
- A separate lawsuit aims to block a state regulation that lets insurers recoup half of a $1 billion FAIR Plan funding order from policyholders across California.
Key quote:
“By colluding to push plaintiffs and so many like them to the FAIR Plan, the defendants have reaped the benefits of high premiums while depriving homeowners of coverage that they were ready, willing, and able to purchase to ensure that they could recover after a disaster like January’s wildfires.”
— Michael J. Bidart, attorney for homeowners
Why this matters:
California’s wildfire insurance crisis is a growing threat to financial stability and community resilience. As wildfires intensify due to climate change, insurers are increasingly pulling out of high-risk areas, leaving homeowners to rely on the FAIR Plan, a state-mandated program with higher premiums and weaker protection. This shift disproportionately impacts working- and middle-class families who can't absorb rebuilding costs or risk losing their homes entirely. With over half a million homes now on emergency coverage, the state faces mounting pressure to protect its residents from both the flames and financial fallout.
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