Wildfires in California are nothing new, but this year’s devastation has rewritten the playbook. With an estimated $28 billion to $75 billion in insured losses and a staggering $275 billion in economic losses, the Los Angeles wildfires have become the costliest natural disaster in U.S. history. The ripple effects are hitting homeowners, landlords, and the entire insurance industry harder than ever.
One of the biggest casualties of the fires isn’t just homes — it’s homeowners insurance itself. With so many insurers facing massive claims, the state’s FAIR Plan, California’s insurer of last resort, is being overwhelmed. It’s now asking private insurers for a $1 billion bailout, but the real question is: Will insurance even be accessible or affordable in the future?
Some of the biggest challenges ahead include:
Home insurance costs are expected to rise by double-digit percentages across California.
Many major insurers have already pulled out of high-risk wildfire zones.
Those who rely on insurance to secure loans or maintain rental properties now face uncertainty.
As insurance premiums soar, the affordability of homeownership is changing rapidly. Many Californians are now reconsidering whether to purchase homes in high-risk wildfire areas. This has led to several trends:
Home Values Declining in Fire-Prone Regions: Areas historically affected by wildfires are seeing a dip in property values as insurance costs rise.
Increased Demand for Climate-Resilient Housing: Builders are incorporating fire-resistant materials and energy-efficient designs to attract buyers.
Stricter Lending Requirements: Mortgage lenders are becoming more cautious, requiring more comprehensive insurance policies for homes in high-risk areas.
For landlords, this means re-evaluating investment strategies, considering property modifications, and exploring alternative locations with lower climate risks.
If you own property in California (or any high-risk climate zone), now is the time to act. Here’s how to protect your investment and mitigate risk:
If you still have a policy, check your renewal terms ASAP — expect higher rates or changes in coverage.
If your insurer pulls out, explore all your insurance options including less known providers.
Fire-resistant materials (metal roofing, concrete siding, ember-resistant vents) can lower premiums.
Smart monitoring systems help catch threats early (e.g., wildfire detection sensors, sprinkler systems).
Some private insurers still cover high-risk areas but often at premium rates.
Bundling home insurance with landlord or business policies can provide better rates.
Self-insuring (setting aside an emergency fund) may be an option for some landlords.
Climate Risk Data: Know the risks before investing or renewing a lease.
Home Insurance and Warranty: Access vetted home insurance options through Henge.
Proactive Mitigation: Reduce claims by preventing damage before it happens.
The wildfire crisis is more than a wake-up call — it’s a tipping point. The traditional insurance model is struggling to keep up with climate-related risks. We’re seeing a shift toward:
Parametric Insurance Models: Instead of reimbursing losses, these policies pay out immediately when predefined conditions (like wind speeds or fire proximity) are met.
State and Federal Involvement: Governments may need to step in with subsidies or risk-sharing programs to keep insurance markets stable.
Tech-Driven Risk Assessment: AI and big data are improving climate risk predictions, helping insurers and homeowners make more informed decisions.
As wildfires and climate risks escalate, the real estate industry must adapt. The key is proactive risk management, strategic insurance planning, and smart home modifications.
If you’re a landlord or homeowner, now is the time to start thinking long-term. Review your insurance, upgrade your property’s resilience, and stay informed about market shifts.
The cost of inaction is far greater than the price of preparedness.
The wildfire crisis is no longer a rare event — it’s the new reality for homeowners and landlords. But the future isn’t just about reacting to disasters — it’s about being proactive, informed, and prepared.
That’s why Henge is here to help. Whether you need real-time climate risk data, access to insurance alternatives, or support in making your property more resilient, Henge is your partner in future-proofing your investment.