America's largest and, for some owners, only option for a home insurer is pulling back its operations in the state of California, leaving many with no more options to secure their property's value amid wildfire danger in the state reaching new heights. After saying in May of last year that it wasn't giving out any new California contracts, news broke in March that 72,000 State Farm policies in the state would not be renewed. Now, a filing shows which zip codes these homes are in.
In many affected places, State Farm had been the only or only major insurer still operating, according to reporting by CBS. Most companies had already deemed the locations uninsurable due to the danger of wildfires whose flames have been fanned by climate change.
This chart shows California zip codes where insurer State Farm is discontinuing the highest shares ... [+]
Among the zip codes in question are many wealthy neighborhoods in the hillsides in or near Los Angeles, for example Pacific Palisades, Bel Air or Calabasas. Others, like Brentwood or Tarzana, also include more modest stretches. However, the policies most likely to be discontinued are for those homes in hilly areas more likely to come at a premium in or near big metros but also more likely to fall victim to a fire.
Still, State Farm's move speaks volumes to homes in wooded areas of California now being considered so likely to be destroyed that the usual calculations of insurance companies have stopped working out—at least for those high-end properties that are now having their contracts discontinued.
Home insurance policies are usually renewed every year. In the L.A. zip codes with the biggest shares of contracts that will not be rolling over, between 542 (in Tarzana) and 1,626 policies (in Pacific Palisades) are now running out. The highest absolute number, however, is in the 94563 zip code of Orinda near Oakland. Other highly affected zip codes are near San Diego as well as in Santa Marta north of the Bay Area.
The global threat of wildfires
Wildfires burned more than 4 million acres and more than 2.5 million acres in California in 2020 and 2021, respectively. While they were followed by more subdued seasons in 2022 and 2023, the size of 2020's fires doubled the previous state record set under modern data keeping. Old records from the first half of the 20th century have largely been discredited and removed from official websites as explained here. The fact that California's wildfires have also gotten much more expensive is tied to more people moving into forested and mountainous areas, which are considered very desirable in California and elsewhere, but are not proving a sustainable place of residence in the current climate.
Outside of the state, the U.S. did see major fires in 2022 and 2023. The earlier year was as devastating for the country as a whole as 2021, with more than 7 million acres burned in either year. Fires raged in Arizona. Colorado, New Mexico, Texas, Oregon and Washington in 2022. In 2023, around 2.7 million acres burned, but wildfires still made headlines in a more unusual location—Hawaii. Globally, fire seasons have gotten longer and wildfire alerts have gotten more numerous, for example in Southern Europe, which has been suffering from drought and an increasing number of fires.
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Charted by Statista
