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Californians Who Fortify Their Homes Against Wildfires Will Now Pay Less for Insurance

In a national first, a new state regulation mandates that insurance companies offer discounts to customers who take on wildfire safety and mitigation actions.

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Aerial photo of burned homes
The 2018 Camp Fire was one of the most destructive in California history, burning through nearly 19,000 structures.
Photo: Noah Berger (AP)

California homeowners might soon see some reprieve in skyrocketing property insurance rates. That is, if they take steps to wildfire-proof their houses. The West Coast state is the first in the country to require insurance companies to lower premiums when and where customers enact suggested wildfire safety and mitigation tactics.

The goal of the new regulation is to “protect consumers and hold insurance companies accountable,” said California’s insurance commissioner Ricardo Lara in a news release announcing the proposed change last month. Lara described the rule as “groundbreaking” and claimed that it would help more homeowners in the state access insurance at more affordable prices, as well as increase communities’ wildfire safety. On Monday, the regulation officially became state law.

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Now, insurance companies have 180 days to submit revised rate filings that incorporate cuts for safety measures and to create a new filing process for residents to access their wildfire risk determination data. Less than half of insurers currently offer discounts for mitigation efforts, but soon all of them will have to.

Amid seemingly unending drought and heatwaves, wildfire has become something of a permanent state in California. Climate change is stretching “fire season” into a year-round concern. And the number of acres burned as well as the amount of structures destroyed have been increasing as well.

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More than $4.5 billion in structural losses happened during the state’s 2018 fires alone, and the amount of burned acres containing homes quadrupled between 1990 and 2018, according to a report from the University of California, Santa Barbara. The cost of insuring homes in wildfire-prone areas has increased accordingly.

Rates went up by 10% in a single year, between May 2021 and May 2022, according to one analysis from Policygenius. And insurance costs were bad before that too. In a hearing from 2020, cited in Commissioner Lara’s announcement, dozens of state residents told officials their rates were unsustainable—reaching as high as $20,000 per year.

By incentivizing certain wildfire-safe actions and guaranteeing accompanying rate cuts, California is seemingly trying to tackle both the problems of insurance costs and the rising cost of fires themselves. The safety steps rewarded by the new rule are those outlined in the state’s “Safer from Wildfires” program. For instance, maintaining a 5-foot “ember-resistant” buffer zone around your house, keeping decks and yards clear of vegetation or debris, trimming trees, and upgrading roofs and windows would lead to lower premiums. All of which are suggestions closely aligned with FEMA recommendations.

“The reality of climate change is driving my determination to help communities better prepare, help our firefighters save lives, and help more Californians find insurance they can afford,” said Lara in Monday’s news statement. And as climate change progresses, the question of who will pay for the damage, and how, will become even more pressing.

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California isn’t the only state reckoning with a faltering insurance market, in the face of worsening extreme weather and disasters. Unable to keep up with flood payouts, 12 insurance companies in Florida have shuttered in the past two years.