One year later: Have the Palisades and Eaton fires changed home insurance?

The fires and the fallout: A quick recap

A brief timeline of the fires:

Leading up to the fires: Previous fires caused insurers to reduce fire coverage offerings or leave the state altogether, and many residents turned to the FAIR plan for fire coverage.
January 7, 2025: The first flames of the Palisades fire are seen in the morning. The Eaton Fire ignites in Eaton Canyon, driving into Altadena.
January 8, 2025: High winds drive the rapid growth of both fires. The Palisades Fire tears through Pacific Palisades and Malibu coastal communities.
January 31, 2025: Both fires are fully contained.
Claims pour in: The significant damage from the Palisades and Eaton fires placed stress on insurers and the FAIR Plan, with thousands of claims and billions in damage to process.
One year later: Some homeowners in affected areas are still waiting for claim resolutions and government permits before they can begin repairing or rebuilding their homes.

Immediate insurance shock: Claims, moratoriums, and confusion

As residents reeled from the losses, an insurance crisis that had been building for years suddenly became front and center in their lives. Here’s how California’s already fragile insurance market responded.

Before the fires: A fragile market

Before January 2025, homeowners in California already faced an unstable insurance market.

Major insurance companies, including State Farm and Allstate, stopped offering new policies in California
In high-risk areas, insurance companies nonrenewed policies to reduce their exposure
State Farm, the state’s biggest insurer, announced nonrenewal of thousands of policies, 7,600 of which were in the Palisades fire zone

The California FAIR plan is a last resort for homeowners needing fire coverage. It’s intended as a stopgap for homeowners unable to obtain or afford insurance; its coverage is minimal relative to the cost.

According to a Congressional Budget Office report (2024), climate-driven disasters are making home insurance harder to obtain and afford in high-risk areas, driving homeowners to seek state alternatives, such as the FAIR Plan. The lack of affordable home insurance, combined with a reduced number of insurers in the market, creates a fragile balance that can easily be overwhelmed by a major catastrophe, such as the Palisades and Eaton fires.

What’s going on with the FAIR Plan?

The media relations team at the California FAIR Plan had this to say to our inquiry:

“California FAIR Plan exists to ensure that homeowners can access basic property insurance when coverage is unavailable in the voluntary market, particularly in areas at high risk for wildfire. Even before the catastrophic Palisades and Eaton fires, the FAIR Plan experienced an increase in demand as more homeowners were having difficulty finding coverage in the voluntary market, and growth continues. The FAIR Plan believes that restoring a healthy and sustainable insurance market will require continued collaboration among insurers, regulators, and policymakers to expand availability and strengthen resilience to ensure that homeowners have meaningful options for coverage across the state.”

FAIR Plan policy growth from 2023 to 2024 was 40% statewide. In the Pacific Palisades ZIP code 90272, it was more than double at 85%.

In September of 2024, a few months before the fires, the FAIR Plan had more than 450,000 policies in force. Of those:

1,430 of those were in the 90272 ZIP code (Pacific Palisades)
2,336 were in ZIP code 90265 (Malibu)

After the fires: One-year moratorium on non-renewals

California Insurance Code § 675.1 protects homeowners from insurers cancelling coverage or increasing premiums for one year after a declared state of emergency. The code also requires insurers to renew policies for up to two years to maintain coverage during the rebuilding process.

In response to catastrophic losses, California Bulletin 2025-1 was issued on January 7, 2025, following the Governor's declaration of a state of emergency, to stabilize the insurance market and provide homeowners with assurance. The bulletin details a one-year moratorium on cancellations and non-renewals for residential property insurance in ZIP codes within or adjacent to the Palisades and Eaton fire perimeters.

“We have not seen a pattern of non-renewals following expiration of any of the previous moratoriums and do not expect any change from that moving forward. With implementation of the Insurance Commissioner’s “Sustainable Insurance Strategy,” (SIS) the dominant discussion among property insurers is figuring out how to begin growing again in California,” says Rex Frazier, president of the Personal Insurance Federation of California.

On January 25, State Farm announced that it would renew its approximately 1,100 policies in force for homes affected by the Palisades and Eaton fires.

Homeowners in the affected areas can rely on their insurance to cover repairs or rebuilding without fear that their policies will be canceled or not renewed.

How home insurance actually changed after the Palisades & Eaton fires

In the short term, insurers have frozen policies and are facing increased pressure, with thousands of claims still unresolved. A year out, the long-term impact on the insurance industry remains unclear, but homeowners should be prepared for what is coming.

As of September 2025, insurers in Southern California had processed nearly 40,000 claims and paid more than $20 billion in response to the fires, according to the California Department of Insurance (CDI). While these numbers are enormous, outstanding claims remain, and the fallout from billions in losses is still being calculated. Those losses highlight the need to address risk.

Structural changes: New rules for how insurers price wildfire risk

California’s sustainable insurance strategy aims to stabilize the insurance market by preventing insurers from exiting and lowering homeowners' financial risk.

Key factors of the strategy include:

Insurers may use forward-looking catastrophe models to assess risk. Previously, rates were based on historical data, which did not account for the increase in weather-related events.
Insurers must write a minimum number of home insurance policies in high wildfire-risk areas to help homeowners exit the FAIR Plan.
Homeowners are eligible for tax relief if their homes are damaged or destroyed in a catastrophic natural disaster, such as a fire or flood.
Homeowners may apply for mortgage forbearance if they are facing financial hardship as a result of a wildfire.

What a post-Palisades and Eaton fire homeowners policy looks like

Obtaining coverage in the wake of these fires, as well as the numerous other fires in recent years, is likely to remain challenging. Here’s a look at what to expect.

Coverage terms that are changing

While the California Department of Insurance (CDI) is working to ensure homeowners have access to affordable insurance, policy changes are coming.

Deductible changes. Homeowners may see higher deductibles for wildfires and other named perils, such as floods. A deductible is the amount you pay before your insurance pays a claim. Typically, homeowners choose the deductible amount, but insurers may begin requiring higher deductibles to offset claims.
Stricter standards. Policies may also have more stringent safety requirements for property. For example, defensible space requirements may increase, necessitating home hardening with fire-resistant materials and enhanced vegetation management to prevent wildfires from spreading.
New clauses. Homeowners may also see co-insurance clauses used more frequently. Co-insurance occurs when a policyholder agrees to pay a portion of the claim, such as when an insurer pays 80% and the homeowner covers the remaining 20%.
Changes to sublimits. Smaller sub-limits (a limit on what will be paid out for specific items) for other structures, such as fences, decks, and outbuildings, may also be included in the policy to reduce the insurer’s liability.

Underwriting questions you’re more likely to see now

Insurers may also ask more questions than before to have a better understanding of the risk involved in writing your home insurance policy. Understanding the information an insurer may need helps you be prepared for policy renewals.

Home insurance questions to be prepared for include:

What is the distance from your property to canyons, wildland areas, and egress routes?
Have you experienced evacuation orders previously?
What mitigation steps have you taken? Have you installed a Class A roof, ember-resistant vents, non-combustible fencing, enclosed eaves, or other fire-resistant materials?
Have you taken advantage of local or state fire mitigation programs, such as the California Wildfire Mitigation Program?

What should homeowners do now?

If your home was damaged during the wildfires, there are steps that you can take to ensure you’re getting the best insurance protection possible.

Verify your moratorium protection

Verify whether the insurance moratorium applies to your ZIP code for properties affected by the Palisades and Eaton fires. Then, confirm with your insurer that your coverage won’t be cancelled and will be renewed.

Audit your coverage vs. today’s rebuild costs

Review your current homeowners insurance coverage and limits. Due to rising material and labor costs, as well as the costs of upgrades mandated by new building codes, many homeowners were underinsured long before the fires. Reconsider your dwelling coverage and add extended replacement coverage to ensure your policy can fully cover the repair or replacement of your home.

Document mitigation and asking about discounts

It is essential to maintain accurate records for any home hardening work you have done, such as installing a Class A roof or remodeling with fire-resistant materials. Keep photos and receipts and share them with your agent to document upgrades. You may also qualify for additional insurance discounts based on your upgrades.

“Most insurers have embraced the mitigation research from the Insurance Institute for Business and Home Safety (IBHS), which means that it will be important for [customers to] become familiar with IBHS’ “Wildfire Prepared Home” standard. The “base” standard is achievable by most,” Frazier says.

Find the Wildfire Prepared Home standards here.

“The “plus” standard is more robust (and doesn’t ignore the danger of wood decks like the “base” standard) and more respected by insurers, but it is tougher to achieve because of the expense. But the “plus” standard is more likely to result in insurability,” says Frazier.

If you’re dropped after the moratorium

Once the insurance moratorium ends, you may be faced with your insurer refusing to renew coverage. Fortunately, you have alternatives if your current insurer chooses not to extend coverage.

The CDI offers a tool to help you find insurers in your market. Compare quotes from multiple insurers to find the best coverage at the most affordable price.
Evaluate the FAIR Plan as an intermediate resort. Although some limits and exclusions may not offer the complete coverage you need, you may be able to use the plan until you find a suitable insurer.
Talk to an independent agent about a surplus insurance line, offering specialized coverage for high-risk homes. Coverage may be expensive, but it may provide protection you can’t find elsewhere.

From a disaster to a long-term reset

For many homeowners, the Palisades and Eaton fires marked the moment when home insurance stopped being a background bill and became a vital resource. The catastrophe changed the insurance mindset from “Can I rebuild?” to “Can I find insurance for what I build?”

LA homeowners may find that their insurers no longer offer the same coverage or have affordable rates. If that is the case, the CDI provides tools to find and compare home insurance companies, enabling homeowners to compare coverages and rates across multiple insurers.

But, there’s good news.

“We understand that the rate of CA Fair Plan growth is slowing (and await publication of their Q4/2025 numbers), which is a good sign of a healing market. Certainly it will be important for the market leader, State Farm, to conclude its current rate hearing/litigation with the CDI/Consumer Watchdog because it cannot make a [Sustainable Insurance Strategy] filing until that matter is finalized. It’s tough for the market to come back when 20% of the market (ie, State Farm) is tied up in rate litigation and unable to make a SIS filing,” Frazier says.

Homeowners need to review their policies annually, regardless of whether they are considering a new insurance company, and reevaluate their needs regularly, especially if they live near canyons or other areas adjacent to wildlands.