Two California Democrats reintroduced legislation Tuesday requiring a federal study of wildfire insurance coverage, as fires continue to rage across Los Angeles County.
Rep. Maxine Waters, ranking member of the House Financial Services Committee, and Rep. Brad Sherman introduced the Wildfire Insurance Coverage Study Act amid concerns about insurance companies raising premiums and reducing coverage in high-risk areas.
The bill would direct the Government Accountability Office to examine insurance availability and affordability in wildfire-prone regions, along with climate change impacts on insurance markets and coverage disparities in underserved communities.
"We are witnessing firsthand the destructive and unpredictable impact of climate change as Los Angeles County faces the worst wildfires in its history," Waters said. "Over the years we've watched insurance companies raise premiums, reduce coverage, and abandon wildfire coverage in high-risk areas altogether."
The legislation previously passed committee with bipartisan support but never reached a floor vote. Sherman urged House Speaker Mike Johnson to bring the bill forward quickly.
"While insurance has traditionally been a state issue, the devastating fires in my district and the greater Los Angeles area underscore the need for Congress to focus on the availability and cost of fire insurance coverage," Sherman said.
The study would also examine financial burdens on families and businesses from rising premiums and recommend federal actions to stabilize insurance markets.
Questions of insurance have been growing since the blaze started last week and have been a topic of controversy in California for years.
Seven major insurers have halted new homeowners' policies in California since 2022, part of a broader retreat from high-risk markets affected by climate change.
Similar pullbacks have occurred in Louisiana and Florida, contributing to a nationwide drop in home insurance coverage. The percentage of uninsured homeowners has more than doubled from 5% to 12% since 2019.
Those who maintain coverage face soaring costs, with California premiums rising sharply over the past five years.
State Farm announced Wednesday it will offer policy renewals to Los Angeles County residential policyholders affected by recent wildfires, reversing its earlier decision to drop coverage in the region.
The change affects approximately 1,100 residential policies in Pacific Palisades' 90272 ZIP code, plus thousands more throughout the county. The insurer had previously planned to discontinue roughly 30,000 property insurance policies and 42,000 commercial policies in March.
In a statement the company said it is focused on helping customers recover. "Our claims force is the largest in the industry and we are bringing the full scale and force of our catastrophe response teams to help customers recover. The team is on the ground, supported by our local agency force and tens of thousands more across the enterprise. As of Thursday (1/16/2025), we’ve received over 7,850 home and auto claims and have put over $50 Million back into customers’ hands. These numbers will rise as residents return and assess damage," said the statement.
The company said its decision to pause non-renewals for homeowners, rental dwelling, and residential community association policies in force as of January 7, 2025, extends to all of Los Angeles County.
"This decision reflects our commitment to supporting our customers and goes beyond the Department of Insurance's request," said the statement. "Our focus is on continuing to meet our customers’ needs and working closely with the State of California to create a sustainable insurance market. This is an evolving situation, and our focus remains on our customers. LA County customers will have an option to renew with State Farm for another policy term. Policyholders in the fire zones with total losses would have the option to renew with State Farm for two policy term renewals, as required by law."
The fires are having an impact on insurance across the country.
The Hawaii legislature is starting a new session with a focus on stabilizing the state’s property insurance market. This comes as climate change-related disasters like hurricanes and wildfires are causing insurance carriers to raise rates. Insurance companies buy reinsurance on the global market, and when rates rise due to disasters in other areas like Florida, North Carolina, and California, it affects Hawaii's insurance market too, leading to higher premiums or a lack of insurance availability in the islands.
The Associated Press contributed to this report.
