The wildfires that have devastated large parts of Los Angeles County have drawn fresh attention to the struggles many Americans face insuring their homes.
Since 2022, seven of the 12 largest insurance companies have stopped issuing new policies to homeowners in California, citing increased risks due to climate change. California isn’t alone: The same thing has happened in other vulnerable states, including Louisiana and Florida. The proportion of Americans without home insurance has risen from 5% to 12% since 2019. Meanwhile, those fortunate enough to have insurance are paying more than ever: Premiums in California, like elsewhere, have increased dramatically over the past five years.
When the private insurance market fails to provide coverage, the government often comes in to fill the gap. For example, the National Flood Insurance Program was established back in the 1960s because almost all private insurers excluded flood coverage. Meanwhile, the California FAIR Plan, which serves more than 450,000 Californians, is a typical state-created insurer of last resort. Such programs, which are available in many states, offer limited coverage to people who can’t get private insurance.
