SACRAMENTO, Calif. (AP) — The wildfires that destroyed homes in multiple sections of the Los Angeles area will test California’s efforts to stabilize the state’s insurance marketplace after many insurers stopped issuing residential policies due to the high fire risk.
The wind-driven blazes that started Tuesday roared through neighborhoods from the Pacific Coast inland to Pasadena and the Hollywood Hills. The vast property damage in a disaster-prone state with high real estate prices and an uncertain insurance landscape could make coverage more expensive and even harder to find.
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Megan Mantia, left, and her boyfriend Thomas, return to Mantia's fire-damaged home after the Eaton Fire swept through, Wednesday, Jan. 8, 2025, in Altadena, Calif. (AP Photo/Ethan Swope)
Firefighters looks for hot spots in a fire-ravaged property in the aftermath of the Eaton Fire Thursday, Jan. 9, 2025 in Altadena, Calif. (AP Photo/Eric Thayer)
A man photographs the destroyed Altadena Community Church, Thursday, Jan. 9, 2025, in the Altadena section of Pasadena, Calif. (AP Photo/Chris Pizzello)
A VW van sits among burned out homes, Thursday, Jan. 9, 2025, in Malibu, Calif. (AP Photo/Mark J. Terrill)
One area likely to feel the impact — and encounter challenges rebuilding — is Pacific Palisades, an affluent community sandwiched between the Pacific Ocean and the Santa Monica Mountains. This week's wildfire there has been named as the most destructive in the modern history of the city of Los Angeles. Flames destroyed businesses, a library, cultural landmarks as well as houses.
State authorities previously listed the Palisades as one of the five Southern California areas with the highest concentration of potential wildfire risks. The community also is among the areas most impacted by an unavailability of insurance coverage.
When State Farm decided to discontinue coverage for 72,000 houses and apartments in California last year, it dropped nearly 70% of its market share in Pacific Palisades, according to the San Francisco Chronicle.
Here's what to know about California's residential insurance crisis and how the ongoing wildfires may further disrupt the policy market:
California has seen other major insurers pull back on property coverage in the nation's most populous state as climate change makes wildfires, floods and windstorms more common and damaging.
Of the top 20 most destructive wildfires in state history, at least 15 occurred since 2015. The data did not include the Los Angeles area fires this week.
In 2023, seven of the 12 largest insurance companies by market share in California either paused or restricted issuing new policies in the state.
That has made it extremely difficult for homeowners in high-risk areas to obtain or afford insurance.
California homeowners in wildfire-prone areas either go without insurance or join the Fair Access to Insurance Requirements (FAIR) Plan, which the state created as a last resort for homeowners who couldn't find insurance.
Many people purchase the FAIR Plan to satisfy their mortgage requirements, but the policies only cover basic property damage and carry a $3 million limit. Given the value of the real estate involved and the limited coverage, FAIR Plan policyholders who lost homes in this week's fires may struggle to be made whole.
The policies can be very bare bones, with some options only covering the actual cash value of what was lost rather than the true replacement costs, said Amy Bach, executive director of the consumer advocacy group United Policyholders.
The plan was designed to be a temporary solution, but more Californians are relying on it than ever. The number of FAIR residential policies issued in the state more than doubled between 2020 and 2024, reaching nearly 452,000 policies.
Policies sold to FAIR customers primarily fund the plan, but insurers would have to pay into the fund if it becomes insolvent or to keep it from insolvency. Under a new state rule, insurers could ask the state to approve rate increases to recoup the money spent on bailing out the FAIR Plan.
FAIR Plan spokesperson Hilary McLean said it could take years to tally total losses from the Los Angeles area fires. While it's too soon for reliable loss estimates, the FAIR Plan anticipates being able to pay out claims from the wildfires, McLean said.
“We are aware of misinformation being posted online regarding the FAIR Plan’s ability to pay claims," she said in a statement. "The FAIR Plan has payment mechanisms in place, including reinsurance, to ensure all covered claims are paid.”
The plan has roughly $700 million in cash on hand and about $2.5 billion in reinsurance, according to testimony given to California lawmakers last year.
The mean home value in Pacific Palisades and its surrounding areas hovers around $3.3 million, according to real estate company Redfin. Owners of the most valuable properties probably are not relying on the FAIR Plan because of the coverage limit, said Jamie Court, president of nonprofit organization Consumer Watchdog.
The claims from the fires will be significant, Court said, “but this is not enough to put the industry out of business or the FAIR Plan out of business.”
On Thursday state lawmakers introduced a bill that would give the FAIR Plan the ability to seek “catastrophe bonds” if it faces liquidity challenges.
In a new tactic, state officials undertook a yearlong overhaul to give insurers more latitude to raise premiums in exchange for more issuing policies in high-risk areas.
A new regulation that took effect this month allows insurers to consider climate change when setting their prices. California previously did not let insurance companies factor in current or future risks when deciding how much to charge. Many companies cited the restriction as their reason for retreating from the state's insurance market.
The state is also in the final stage of approving a rule that would let insurance companies pass on the costs of reinsurance to California consumers. Insurance companies typically buy reinsurance — or insurance for themselves — in case they face huge payouts from natural disasters or catastrophic losses. California is the only state that doesn’t already allow the cost of reinsurance to be borne by policyholders.
The new rules have prompted Farmers, the second-largest insurer in the state, to resume writing new policies for homeowners last month. Consumer Watchdog's Court says the rules also could make it easier for insurers to raise rates with little oversight.
It's “premature” to assess whether the wind-whipped fires and their destruction will put a damper on California's attempt to preserve home insurance options for residents, said Denneile Ritter, a vice president with the American Property Casualty Insurance Association, the largest national trade association for home, auto and business insurers.
But higher homeowner premiums could be coming soon, RAND economist Lloyd Dixon said. If insurers' models signal a potential increase of risk, “then you’d expect to see the requests for premium increases by the insurers,” he said.
California Insurance Commissioner Ricardo Lara said Wednesday that the newly enacted rules allowing climate change consideration in premiums will help insurers accurately assess risks and set fair rates. The state is also issuing a one-year moratorium prohibiting insurance companies from dropping coverage in areas affected by fires.
“Insurance companies are pledging their commitment to California, and we will hold them accountable for the promises they have made,” Lara said in a statement.
Associated Press writer Sally Ho in Seattle contributed.
Megan Mantia, left, and her boyfriend Thomas, return to Mantia's fire-damaged home after the Eaton Fire swept through, Wednesday, Jan. 8, 2025, in Altadena, Calif. (AP Photo/Ethan Swope)
Firefighters looks for hot spots in a fire-ravaged property in the aftermath of the Eaton Fire Thursday, Jan. 9, 2025 in Altadena, Calif. (AP Photo/Eric Thayer)
A man photographs the destroyed Altadena Community Church, Thursday, Jan. 9, 2025, in the Altadena section of Pasadena, Calif. (AP Photo/Chris Pizzello)
A VW van sits among burned out homes, Thursday, Jan. 9, 2025, in Malibu, Calif. (AP Photo/Mark J. Terrill)
U.S. President Donald Trump says Iran has proposed negotiations after his threat to strike the Islamic Republic as an ongoing crackdown on demonstrators has led to hundreds of deaths.
Trump said late Sunday that his administration was in talks to set up a meeting with Tehran, but cautioned that he may have to act first as reports mount of increasing deaths and the government continues to arrest protesters.
“The meeting is being set up, but we may have to act because of what’s happening before the meeting. But a meeting is being set up. Iran called, they want to negotiate,” Trump told reporters on Air Force One on Sunday night.
Iran did not acknowledge Trump’s comments immediately. It has previously warned the U.S. military and Israel would be “legitimate targets” if America uses force to protect demonstrators.
The U.S.-based Human Rights Activists News Agency, which has accurately reported on past unrest in Iran, gave the death toll. It relies on supporters in Iran cross checking information. It said at least 544 people have been killed so far, including 496 protesters and 48 people from the security forces. It said more than 10,600 people also have been detained over the two weeks of protests.
With the internet down in Iran and phone lines cut off, gauging the demonstrations from abroad has grown more difficult. Iran’s government has not offered overall casualty figures.
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A witness told the AP that the streets of Tehran empty at the sunset call to prayers each night.
Part of that stems from the fear of getting caught in the crackdown. Police sent the public a text message that warned: “Given the presence of terrorist groups and armed individuals in some gatherings last night and their plans to cause death, and the firm decision to not tolerate any appeasement and to deal decisively with the rioters, families are strongly advised to take care of their youth and teenagers.”
Another text, addressed “Dear parents,” which claimed to come from the intelligence arm of the paramilitary Revolutionary Guard, also directly warned people not to take part in demonstrations.
The witness spoke to the AP on condition of anonymity due to the ongoing crackdown.
—- By Jon Gambrell in Dubai, United Arab Emirates
Iran drew tens of thousands of pro-government demonstrators to the streets Monday in a show of power after nationwide protests challenging the country’s theocracy.
Iranian state television showed images of demonstrators thronging Tehran toward Enghelab Square in the capital.
It called the demonstration an “Iranian uprising against American-Zionist terrorism,” without addressing the underlying anger in the country over the nation’s ailing economy. That sparked the protests over two weeks ago.
State television aired images of such demonstrations around the country, trying to signal it had overcome the protests, as claimed by Iranian Foreign Minister Abbas Araghchi earlier in the day.
China says it opposes the use of force in international relations and expressed hope the Iranian government and people are “able to overcome the current difficulties and maintain national stability.”
Chinese Foreign Ministry spokesperson Mao Ning said Monday that Beijing “always opposes interference in other countries’ internal affairs, maintains that the sovereignty and security of all countries should be fully protected under international law, and opposes the use or threat of use of force in international relations.”
German Chancellor Friedrich Merz condemned “in the strongest terms the violence that the leadership in Iran is directing against its own people.”
He said it was a sign of weakness rather than strength, adding that “this violence must end.”
Merz said during a visit to India that the demonstrators deserve “the greatest respect” for the courage with which “they are resisting the disproportional, brutal violence of Iranian security forces.”
He said: “I call on the Iranian leadership to protect its population rather than threatening it.”
Iran’s Foreign Ministry spokesman on Monday suggested that a channel remained open with the United States.
Esmail Baghaei made the comment during a news conference in Tehran.
“It is open and whenever needed, through that channel, the necessary messages are exchanged,” he said.
However, Baghaei said such talks needed to be “based on the acceptance of mutual interests and concerns, not a negotiation that is one-sided, unilateral and based on dictation.”
The semiofficial Fars news agency in Iran, which is close to the paramilitary Revolutionary Guard, on Monday began calling out Iranian celebrities and leaders on social media who have expressed support for the protests over the past two weeks, especially before the internet was shut down.
The threat comes as writers and other cultural leaders were targeted even before protests. The news agency highlighted specific celebrities who posted in solidarity with the protesters and scolded them for not condemning vandalism and destruction to public property or the deaths of security forces killed during clashes. The news agency accused those celebrities and leaders of inciting riots by expressing their support.
Canada said it “stands with the brave people of Iran” in a statement on social media that strongly condemned the killing of protesters during widespread protests that have rocked the country over the past two weeks.
“The Iranian regime must halt its horrific repression and intimidation and respect the human rights of its citizens,” Canada’s government said on Monday.
Iran’s foreign minister claimed Monday that “the situation has come under total control” after a bloody crackdown on nationwide protests in the country.
Abbas Araghchi offered no evidence for his claim.
Araghchi spoke to foreign diplomats in Tehran. The Qatar-funded Al Jazeera satellite news network, which has been allowed to work despite the internet being cut off in the country, carried his remarks.
Iran’s foreign minister alleged Monday that nationwide protests in his nation “turned violent and bloody to give an excuse” for U.S. President Donald Trump to intervene.
Abbas Araghchi offered no evidence for his claim, which comes after over 500 have been reported killed by activists -- the vast majority coming from demonstrators.
Araghchi spoke to foreign diplomats in Tehran. The Qatar-funded Al Jazeera satellite news network, which has been allowed to work despite the internet being cut off in the country, carried his remarks.
Iran has summoned the British ambassador over protesters twice taking down the Iranian flag at their embassy in London.
Iranian state television also said Monday that it complained about “certain terrorist organization that, under the guise of media, spread lies and promote violence and terrorism.” The United Kingdom is home to offices of the BBC’s Persian service and Iran International, both which long have been targeted by Iran.
A huge crowd of demonstrators, some waving the flag of Iran, gathered Sunday afternoon along Veteran Avenue in LA’s Westwood neighborhood to protest against the Iranian government. Police eventually issued a dispersal order, and by early evening only about a hundred protesters were still in the area, ABC7 reported.
Los Angeles is home to the largest Iranian community outside of Iran.
Los Angeles police responded Sunday after somebody drove a U-Haul box truck down a street crowded with the the demonstrators, causing protesters to scramble out of the way and then run after the speeding vehicle to try to attack the driver. A police statement said one person was hit by the truck but nobody was seriously hurt.
The driver, a man who was not identified, was detained “pending further investigation,” police said in a statement Sunday evening.
Shiite Muslims hold placards and chant slogans during a protest against the U.S. and show solidarity with Iran in Lahore, Pakistan, Sunday, Jan. 11, 2026. (AP Photo/K.M. Chaudary)
Activists carrying a photograph of Reza Pahlavi take part in a rally supporting protesters in Iran at Lafayette Park, across from the White House, in Washington, Sunday, Jan. 11, 2026. (AP Photo/Jose Luis Magana)
Activists take part in a rally supporting protesters in Iran at Lafayette Park, across from the White House in Washington, Sunday, Jan. 11, 2026. (AP Photo/Jose Luis Magana)
Protesters burn the Iranian national flag during a rally in support of the nationwide mass demonstrations in Iran against the government in Paris, Sunday, Jan. 11, 2026. (AP Photo/Michel Euler)
