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As California battles one of its most devastating wildfire seasons in history, even those most familiar with the insurance industry — brokers, experts, and homeowners alike — are feeling the heat. Among them is Karl Susman, a Los Angeles-based insurance broker who recently found himself not only advising clients but also evacuating from his own home in the Pacific Palisades, one of the hardest-hit areas.
Susman’s experience provides a unique, firsthand look into the insurance crisis that continues to evolve in California. As wildfires rage, many homeowners are questioning the reliability and affordability of their coverage. Susman’s personal journey, coupled with his professional insights, paints a stark picture of the changing landscape of fire insurance and how Californians must adapt to survive both the flames and the financial fallout.
1. A Broker in the Fireline: Personal and Professional Perspectives
For Susman, the firestorm became both a personal and professional test. His immediate priority was the safety of his family, emphasizing that “everything else will find a way to work itself out.” Yet even as he evacuated, he was deeply aware of the devastating effects on his clients and the insurance market at large.
California’s wildfire crisis has created an environment where insurers are continuously reassessing their exposure and risk. With State Farm alone having non-renewed 1,626 policies in the Pacific Palisades area, homeowners face a new reality where obtaining fire coverage has become far more difficult and expensive.
Many of these homeowners, who were previously insured by large companies, are now being forced into the California FAIR Plan, the state’s insurer of last resort. While the FAIR Plan provides basic coverage, it’s limited in scope compared to private insurance, leaving gaps in liability, water damage, and theft protection.
2. The Immediate Crisis: Evacuations and Limited Coverage
As wildfires continued to devastate regions like the Palisades, Sussman emphasized the uncertainty surrounding homeowners’ coverage during evacuations. Lapsed policies, non-renewals, and missed payments during chaotic evacuations have left many homeowners uncertain if they’re even covered.
California’s Insurance Commissioner Ricardo Lara responded by instituting an emergency moratorium: a 12-month freeze on insurance cancellations and non-renewals for residents in active fire zones. The goal is to give homeowners time to stabilize, rebuild, or secure alternative coverage.
However, Sussman urged caution, explaining that while this moratorium prevents policies from being dropped, it does not lower premiums or automatically extend coverage for new construction. Homeowners need to act proactively to ensure they retain coverage and avoid further financial pitfalls.
3. Rebuilding from the Ground Up: What Insurance Does and Doesn’t Cover
One of the most common misconceptions in the aftermath of a wildfire is that homeowners believe their existing insurance will automatically cover rebuilding from the ground up if their property is completely destroyed. Sussman cautioned that standard homeowners policies do not cover rebuilding in full. A builder’s risk policy is required for construction, and homeowners may find themselves scrambling to secure this essential coverage after their home is lost.
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4. The Role of Federal Aid: Biden’s 100% Coverage Pledge
In a move that provided some relief to Californians, President Joe Biden pledged 100% federal funding for the fire response, helping the state’s firefighting efforts and providing assistance for cleanup and recovery. While this federal aid is vital for emergency response, Sussman emphasized that federal relief is not a substitute for private insurance, especially when it comes to rebuilding homes. “You can’t rely on federal relief to rebuild your home,” he stressed.
5. A System Under Reinvention: California’s Sustainable Insurance Strategy
Even before this fire season, California’s insurance market was in turmoil. In late 2024, California regulators introduced the Sustainable Insurance Strategy, a new regulatory framework aimed at rebalancing access to coverage by requiring insurers to offer coverage statewide, including in high-risk areas. The goal is to provide more coverage options, reducing the over-reliance on the FAIR Plan.
However, Sussman warned that this shift towards risk-based pricing would likely result in higher premiums for residents in high-risk areas. As more insurers are forced to cover areas at greater risk, prices will reflect that higher exposure.
6. The Broader Implications: Lessons from the Frontlines
The ongoing crisis in California reveals critical lessons for homeowners across the state:
- Insurance availability is no longer guaranteed, especially in high-risk areas.
- Proactive risk management — like creating defensible space and installing fire-resistant materials — is now mandatory if homeowners want to keep their policies.
- Homeowners must engage actively with their brokers and verify their coverage, particularly in times of crisis when communication is most difficult.
- Government and private sectors must collaborate to ensure long-term sustainability in the face of rising climate risks.
Sussman summarized the challenge: “Fire prevention and insurance reform are no longer separate issues; they are two sides of the same coin.”
7. Conclusion: A Future Defined by Resilience
The wildfire crisis in California is not just a natural disaster — it’s an insurance wake-up call. With insurers pulling back, coverage becoming more expensive, and the landscape of fire insurance rapidly changing, homeowners must adapt to this new reality.
Sussman’s personal evacuation experience underscores the importance of preparedness — not just for surviving the fire, but for navigating the complexities of an evolving insurance market. Whether you’re affected by the fires now or in the future, resilience will be key in overcoming both the flames and the fallout.
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