Where Home Insurance in California Stood in February 2025

Seven weeks after the Palisades and Eaton fires started, the insurance story in California had stopped being an abstract debate about climate change and turned into a set of very specific bills coming due.

On January 9, 2025, the Insurance Commissioner ordered a mandatory one-year moratorium on cancellations and non-renewals for homes inside the perimeters of those two fires and in the adjoining ZIP Codes, whether or not the home suffered a loss.[3] The same announcement asked insurers to pause pending non-renewals for nearby properties the moratorium did not reach, for six months, and to extend the 60-day grace period for paying premiums in the affected areas.[3]

A month later, on February 11, the Commissioner approved a $1 billion assessment on the companies that make up the California FAIR Plan, the state’s insurer of last resort, so it could keep paying claims.[1] I will come back to why that number matters for homeowners who never had a FAIR Plan policy.

The new rules meant to bring private insurers back into high-risk areas had been finalized only in December.[4] So the reforms existed on paper while the losses were still being counted, and buyers in Orange County were asking me whether they could insure the house they were about to offer on.

Why the FAIR Plan Needed $1 Billion After the Wildfires

The FAIR Plan’s own request letter, dated February 11, 2025, is blunter than any press coverage I read at the time. It said the plan had already used up its $510 million in unallocated funds, and that without an assessment it projected it could be unable to pay claims and operating expenses the following month.[2]

The loss figures in that letter, as of February 9, 2025:

About 97% of those wildfire claims were for residential dwellings.[2] The letter projected cash of negative $174 million by March 31, 2025 without the assessment.[2]

Who actually pays an assessment

Under an agreement reached in 2024, insurers covered half of the assessment themselves.[1] For the rest, they could ask to add a temporary supplemental fee to their own policyholders’ bills, calculated as a percentage of premium and subject to the Commissioner’s prior approval.[1] The Department also said insurers could not build the assessment into future rates.[1]

Read that twice if you own in Irvine or Huntington Beach with an ordinary private policy. A wildfire in Los Angeles County could still show up on your bill, because the risk is pooled whether you live in a canyon or not.

What a FAIR Plan policy is, and what it is not

The FAIR Plan dwelling policy is a named peril policy, which means it pays only for the causes of loss listed in it, with fire and smoke at the top of the list.[7] The FAIR Plan itself suggests adding a Difference in Conditions policy for the perils it leaves out.[7]

My view, then and now: a buyer who has to go to the FAIR Plan should budget for two policies from the start, not discover the second one after closing.

How Climate Change Pushed California to Rewrite Its Insurance Rules

The argument behind the reform was simple. If carriers cannot price wildfire risk that grows with a hotter, drier climate, they stop writing where that risk lives, and people end up on the FAIR Plan.

The Department’s answer was a trade. On December 13, 2024, the Commissioner finalized a wildfire catastrophe modeling regulation.[4] An insurer that wants to use those models in its rates has to increase its writing of comprehensive homeowners policies in wildfire distressed areas to no less than 85% of its statewide market share, climbing by 5% every two years until it gets there.[4]

What counts as a wildfire distressed area

The Department’s FAQ uses two tests. A ZIP Code qualifies when at least 15% of its policies are on the FAIR Plan and it includes high or very high wildfire hazard as CAL FIRE defines it.[5] Separately, it identified 28 counties where insurers rated more than 20% of properties at high or very high risk.[5] Smaller insurers and new entrants, and those writing mostly outside wildfire areas, face a lighter obligation: expand writings in wildfire risk areas by at least 5%.[5]

So in February 2025 the new rules were real but had not yet produced a single approved model or a single new policy written because of them. Anyone who told a client that coverage was about to get easy was guessing.

What Rising Insurance Risk Meant for Orange County Home Sales

In early 2025 the insurance question moved from the end of escrow to the beginning. Buyers wanted a quote before they wrote the offer.

I tell buyers to get a written quote from a licensed broker before they remove contingencies. That is my firm position, and I have watched it save more than one deal from falling apart in the last week.

Fire hazard zones and the defensible space rule

Two state rules shape a sale in fire country, and people mix them up constantly.

The first is the Fire Hazard Severity Zone map. The State Fire Marshal’s zones run from Moderate up to Very High, and they measure hazard (how fire is likely to behave over 30 to 50 years) rather than risk, so they do not account for a hardened roof or cleared brush.[8] New maps for Local Responsibility Areas, the land cities and counties are responsible for, were being released in phases in early 2025, beginning February 10 and February 24, with later phases on March 10 and March 24.[8] If you own in Orange County and want to know whether your parcel changed zones, the State Fire Marshal says to ask your local jurisdiction.[8]

The second is Civil Code section 1102.19. Since July 1, 2021, a seller of property in a high or very high fire hazard severity zone has to give the buyer documentation that the property complies with the state defensible space law or the local vegetation management ordinance.[9] Where there is no local ordinance and the property has been inspected, the documentation has to come from the six months before the seller enters into the sale.[9] If the seller has nothing, the buyer and seller sign a written agreement that the buyer will obtain it, within one year of the close of escrow where no local ordinance applies.[9]

Probate and trust sales feel it first

An inherited house is often vacant, sometimes for months, and the policy in the decedent’s name may not fit a vacant property. An executor or trustee who finds out the coverage has lapsed or been non-renewed now has a fiduciary problem as well as an insurance one. I go over the first few weeks of that in what to do in the first 72 hours after inheriting a property, and the selling side in what every executor needs to know before selling estate property.

Whether to fix up a trust property before listing gets harder when a new roof might decide whether a buyer can get coverage. That trade is the subject of selling a trust property as is or preparing it. I do not have a universal answer. In a canyon neighborhood of Laguna Beach the roof can matter more than the kitchen; on a flat street in Fountain Valley it usually does not.

What Homeowners Could Do About Home Insurance and Wildfire Risk

Mitigation is the one lever a homeowner fully controls. Since 2022 California has required insurers to recognize it.

Under the Safer from Wildfires regulation, insurers have to file rates that reflect the state’s wildfire safety standards and give discounts for qualifying mitigation.[6] They also have to give property owners their wildfire risk score and a right to appeal it.[6] The mitigation the Department described includes upgraded roofs and windows, defensible space, home hardening retrofits with landscaping requirements, and community-wide programs such as Firewise USA.[6]

• Ask your current insurer for your wildfire risk score in writing, and ask how to appeal it if it looks wrong.[6]
• Ask which Safer from Wildfires discounts you already receive and which ones you are missing.[6]
• Keep receipts and photos of the roof and vent work in one folder. You will want them for the insurer and for the buyer when you sell.
• If you are in a high or very high zone, keep your defensible space inspection paperwork current, since a buyer will ask for it under section 1102.19.[9]
• If you are on the FAIR Plan, price a Difference in Conditions policy at the same time, and ask a licensed broker whether a private carrier will write you again after the upgrades.[7]

An honest caveat. I have not seen discounts alone turn an unaffordable premium into an affordable one. Mitigation keeps you insurable; the discount is a bonus.

Wildfire also bears on housing supply, which we covered in the debate over wildfires and federal land use, and on rents, as in the rent spike after the Los Angeles fires.

What Has Changed Since February 2025

These are the changes I could confirm from primary sources in October 2026. Anything I could not confirm is left out.

1. April 2025: the hazard map confusion. As the new zone maps rolled out, the Department of Insurance put out an alert saying CAL FIRE hazard maps are not used for insurance rates or underwriting decisions, and that insurers rely on their own computerized wildfire catastrophe models instead.[10]
2. July 24, 2025: the first model cleared. The Department finished reviewing the Verisk Wildfire Model for the United States, its first forward-looking wildfire model, and began accepting rate applications that use it, each tied to plans to write more policies.[11] It said the rules would affect more than 1.5 million homeowners in wildfire distressed areas and on the FAIR Plan, and that models from Karen Clark and Company and Moody’s were also under review.[11]
3. October 15, 2025: Zone Zero still unfinished. The Commissioner urged the Board of Forestry and Fire Protection to finalize its Zone Zero rules, an ember-resistant five-foot zone around structures, and said consistent rules would help more people qualify for Safer from Wildfires discounts.[13]
4. June 2026: the FAIR Plan kept growing. The FAIR Plan reported 696,562 dwelling and commercial policies in force and $768 billion in total exposure as of June 2026.[12]

That last number is the one I watch. As long as the FAIR Plan keeps growing, the reforms have not yet done what they promised, and buyers in fire-exposed parts of Orange County should keep doing their insurance homework before they commit. For the wider market picture, see our Orange County housing market update for August 2026.