Peering Into a Bleak, ‘Uninsurable Future’
As firefighters make some progress containing the unprecedented blazes still tearing through the Los Angeles area, a clearer picture of the true extent of damage is emerging.
It’s bleak. The fires have killed at least 27 people and destroyed more than 12,000 structures, including many homes in Altadena and the Pacific Palisades. Early estimates from AccuWeather project total damages and economic loss at $250 billion.
Traditionally, home insurance has helped cover the majority of costs for covered property owners from disasters and bad weather. However, climate change is fueling a new era of so-called “unnatural disasters,” from supercharged storms to cataclysmic flooding, that are triggering major shifts in the insurance market across the United States.
In Los Angeles, home insurance premiums have surged in recent years as wildfire risk worsens. Some companies have pulled out of the region altogether. As the still-burning infernos continue to scorch properties, many are wondering how the insurance market will shoulder the price of losses without going bankrupt, but a newly implemented plan could pass along some of the costs to policyholders. Experts expect home insurance rates to rise even higher in the wake of the fires, which researchers recently concluded were exacerbated by climate change.
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