California Wildfire Insurance Update: What Homeowners Need to Know Now

It’s been just under a month since the Insurance Commissioner for California approved a 17% emergency rate hike for State Farm General, following recent wildfire-related losses. This decision highlights the financial challenges that wildfires continue to pose for insurers and the impact those challenges have on homeowners across California.

Our latest newsletter article builds on last week’s newsletter on California Homeowners Insurance considerations, by explaining what this rate hike means for California homeowners and how you can work with your broker to make sure your home and family are protected. 

Why the Emergency Rate Hike Happened

State Farm General, California’s largest home insurer, has faced serious financial strain following this year’s devastating wildfires in areas like Los Angeles County. According to the Los Angeles Times, State Farm’s surplus dropped by $1.2 billion between 2022 and 2024, leaving it with about $620 million to pay future claims.

In response, the Insurance Commissioner approved an emergency 17% increase in homeowners insurance rates for State Farm customers in California. Additional increases were approved for condo owners (15%) and landlord rental-dwelling policies (38%).

While controversial, especially among wildfire survivors who have reported delays and disputes over claims, this decision reflects a broader challenge that’s been growing for years: insurers are struggling to manage the financial demands of catastrophic wildfire losses while keeping their commitments to homeowners. (Source: Los Angeles Times, May 13, 2025)

What This Means for California Homeowners

For many homeowners, already grappling with high premiums, news of yet another rate hike is understandably concerning. But it’s important to understand the bigger picture:

✅ Insurer Financial Stability Matters If an insurance company doesn’t have enough funds to pay claims, every homeowner it insures is at risk, especially after a major wildfire.

✅ Wildfire Coverage Remains, But It’s Harder to Secure While wildfire damage is still technically included in most standard homeowners policies, insurers have increasingly withdrawn from high-risk areas or set premiums at levels that many families simply can’t afford. Some homeowners have faced non-renewals, leaving them scrambling for alternatives.

✅ Non-Renewals Are on the Rise Insurers aren’t cancelling policies mid-term, but many are choosing not to renew policies in high-risk zones, making it even harder for homeowners to maintain continuous coverage.

How to Protect Yourself and Your Home

Given these developments, California homeowners need to take a proactive approach to protecting their homes and finances. To that end, it’s essential to work closely with your broker to fully understand your policy, identify potential gaps or exclusions, and explore solutions that work for your unique situation. 

This means reviewing your dwelling and personal property limits, checking for wildfire-related endorsements, confirming your insurer’s financial stability, and understanding any obligations you may have, such as mitigation measures, to maintain coverage.

How Your Broker Can Help

An experienced broker should do more than just sell you a policy. Here’s what a good broker should be doing for you in California’s challenging insurance market:

✅ Explaining the Impact of Rate Hikes A knowledgeable broker can help you understand why your rates are increasing and whether your coverage is still appropriate given your budget and risk profile.

✅ Assessing Policy Details and Gaps Your broker should review your existing coverage with you when you ask to identify any limitations, especially regarding wildfire risk, and advise on endorsements or adjustments to make sure you’re adequately protected.

✅ Clarifying Insurer Stability Your broker should be able to explain your insurer’s financial health and what that means for your claims experience if disaster strikes.

✅ Exploring Alternative Solutions When Needed While standard homeowners insurance may be limited in some high-risk areas, your broker should help you evaluate all options in the standard market, including strategies to strengthen your insurability through mitigation measures, rather than defaulting to last-resort solutions unless absolutely necessary.

✅ Being Your Advocate If you face a non-renewal or significant premium increase, your broker should be your advocate, helping to determine if appealing the carrier’s decision is the right step, shop for competitive coverage, and understand your rights under California’s insurance regulations.

Final Thought 

The recent rate hike for State Farm General highlights a reality every California homeowner is facing: while wildfire risk is a fact of life in our state, the insurance market’s response, through rate increases, stricter underwriting, and non-renewals is overwhelming.

While no one can fully control or predict how the market is going to react, you can take steps to stay informed, understand your coverage, and work with an experienced broker to navigate these challenges. 

At H.N. Christensen Insurance Brokers, we’ve been helping California families protect what matters most for over 100 years. We understand the state market, the challenges, and the options available to homeowners. Our role is to help you make sense of it all, so you can make confident, informed decisions for your home and family.

📞 Contact us today. We’re here to help you stay protected, no matter what comes next.