Before they lost their homes in the LA fires, many lost their insurance
Many who lost homes in the LA fires had been dropped by their insurer, and forced to use last-resort coverage. Some say it won’t be nearly enough to rebuild.
AILSA CHANG, HOST:
Many fire victims in Los Angeles lost their homeowners insurance before they even lost their homes. Major companies, like State Farm and Allstate, have been pulling back from California as wildfires here have intensified. NPR’s Jennifer Ludden reports.
JENNIFER LUDDEN, BYLINE: In a nearly empty rental house in East LA County, Sogol Moshfegh is struggling to assemble an IKEA bunk bed for her two young boys.
SOGOL MOSHFEGH: Got those two beds done.
LUDDEN: The family lost their home in the Altadena fire. They’ve just started moving in here. Order-out lunch arrives.
MOSHFEGH: Pizza time.
UNIDENTIFIED CHILD #1: Yeah.
UNIDENTIFIED CHILD #2: That’s for kids.
LUDDEN: Last summer, like so many others in LA’s burn zones, Moshfegh and her husband’s insurance company said it would not renew their policy. When their broker called around to replace it…
MOSHFEGH: She was like, I’m trying to get you insured, but your whole zip code is closed.
LUDDEN: They ended up with a policy through their mortgage company, which was a relief, but they’re only now realizing it covers a lot less than their old policy. It will pay for a rebuild, though, likely only half the cost. She says it will not cover all the possessions they lost or the rent for this temporary place.
MOSHFEGH: So all of it will be out of pocket, and we’re really lucky to have a GoFundMe that’s helping with that.
LUDDEN: Looking back, Moshfegh says she would have happily paid more to keep her old insurance policy. But the insurance industry says this is exactly why companies have been retreating from California. They are not allowed to charge enough to cover their risk.
MARK SEKTNAN: The real issue is the inability to get adequate rates.
LUDDEN: Mark Sektnan is with the American Property Casualty Insurance Association. He says for decades, state regulation has kept rates artificially low. Brand-new rules will allow insurers to raise rates, but they’ll take time to roll out.
SEKTNAN: This is a risk-based product. And so those people who have the highest risk should actually pay more.
LUDDEN: Meanwhile, with the exodus of big insurers over the past two years, independent brokers have scrambled to find companies that will protect people. Jake Pullen has dozens of clients in Pacific Palisades, and as the fire there exploded, he panicked. Was there any missing paperwork?
JAKE PULLEN: I was worried sick. Literally, my stomach was in knots. I was auditing all the zip codes that the fires were in, making sure that all my clients had policies.
LUDDEN: Thankfully, his clients were all covered. Pullen says he got about half of them enrolled in what’s called the California FAIR Plan. It was created by the state to be an insurer of last resort, but demand has skyrocketed. It costs more and covers less, with an all-inclusive payout capped at $3 million. For Michael Balsley and his family, whose Palisades home is completely gone, that means a major loss.
MICHAEL BALSLEY: We would never be able to build the house as it was when we bought it, let alone what it was with all our belongings and improvements and things like that.
LUDDEN: Balsley says when he and his wife bought the place, they did think about wildfires. They ruled out living next to a lush park that could ignite, but they never imagined fire would wipe out the village center. He’d like to see insurers and governments work out new options for living with this higher level of risk.
BALSLEY: It’s not fair to people who live in California to just not be insurable because there’s many places that I think are really safe. But for places like ours, where there’s a question, it would have been nice to say, well, what could make it insurable?
LUDDEN: For Sogol Moshfegh, the expense of rebuilding her family’s home in Altadena is daunting. Their limited insurance means they’d have to take out another big loan while still paying their mortgage and years of rent.
MOSHFEGH: I’m trying to be really optimistic about it. But there’s, like, so much of me that’s like, this is going to bankrupt us, and I don’t want that to happen.
LUDDEN: She says she still wants to be a homeowner again, but maybe not in California. Jennifer Ludden, NPR News.
Copyright © 2025 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.
