After years of devastating wildfires and mounting insurance turmoil, California is taking a bold step to stabilize its faltering homeowners market. Starting in 2025, new state regulations will require insurance companies to write policies for at least 85% of homes in designated fire-risk areas — a sweeping measure that could reshape the future of property coverage across the state.
For homeowners like Bruce Silverstein, a Malibu city councilmember whose home was damaged in the recent Franklin Fire, this mandate represents long-awaited relief. For the insurance industry, it signals a major regulatory shift — one that could balance accessibility with accountability, but not without growing pains.
Over the past decade, California has endured an escalating cycle of destruction: larger, faster, and more frequent wildfires causing billions of dollars in insured losses. In the aftermath, major insurance carriers — including State Farm, Allstate, and Farmers — began withdrawing or pausing new homeowner policies, especially in high-risk zones such as Malibu, Sonoma, and the Sierra foothills.
The exodus left hundreds of thousands of Californians relying on the California FAIR Plan, a state-run insurer of last resort that provides basic fire coverage when no private carrier will. But FAIR Plan policies are limited and expensive — they only cover fire and smoke damage, forcing homeowners to purchase supplemental "Difference in Conditions" (DIC) policies for full protection.
For homeowners like Silverstein, the gap between risk and coverage has become untenable.
"People have $15 or $20 million homes," he explained, "and they can only get $3 million worth of insurance through the FAIR Plan."
That mismatch — between home values and insurable limits — has pushed California regulators to act.
Under the new rules, which take effect in 2025, all admitted insurance carriers in California will be required to:
Write coverage for at least 85% of homes in ZIP codes classified as wildfire-exposed or high-risk areas.
Reenter markets they previously retreated from, including coastal and mountain communities.
File rates using updated catastrophe models approved by the California Department of Insurance (CDI).
These measures aim to ensure that private insurers, not just the FAIR Plan, shoulder the responsibility of providing coverage to Californians.
Insurance expert Karl Susman, a Los Angeles-based agent and host of Insurance Hour, called the change a "big victory for homeowners."
"Because of these new regulations," Susman explained, "it's going to force carriers to write business. And when we have multiple carriers writing business, we're going to see rates start to come down."
In short, more participation equals more competition — and potentially, more stable pricing.
The California FAIR Plan has been both a safety net and a warning sign. Originally designed as a temporary fallback, it has ballooned to cover more than 350,000 homes, representing billions in exposure.
While the plan has remained solvent, its structure makes it inherently risky. Every private insurer operating in California must contribute to FAIR Plan losses, meaning that catastrophic fire years strain the entire market.
The new 85% coverage requirement aims to rebalance this system, pushing insurers back into the field rather than allowing them to rely on the FAIR Plan as a buffer.
Susman emphasized that the FAIR Plan "was never meant to be a permanent solution," and that spreading risk back across private carriers is the only way to restore long-term market stability.
Some consumers worry that requiring insurers to cover fire zones will automatically lead to soaring premiums. Susman and other experts disagree — at least partly.
California's Department of Insurance retains full control over rate filings under Proposition 103, the 1988 law that gives regulators final approval on pricing.
"The Department of Insurance maintains complete control and discretion over every single rate filing in the state," Susman said. "They'll make sure that any rate being charged is legitimate."
This means that while premiums will still reflect relative risk — higher in fire zones, lower elsewhere — insurers won't be able to engage in price gouging. Every rate increase must be justified through actuarial data and subject to public scrutiny.
The balance, according to Susman, lies in allowing rates that reflect real risk while preventing unfair or excessive pricing.
So what does this mean for the average Californian living in a high-risk fire area?
Most homeowners won't see immediate changes in early 2025. Insurers will need time to refile rates, adjust underwriting systems, and roll out new policy availability. However, some markets — especially in Malibu, Napa, Placer, and Sonoma Counties — could start seeing private carriers offering new quotes by midyear.
As more carriers reenter fire zones, competition should slowly improve, reducing pressure on FAIR Plan enrollment. Homeowners may be able to combine comprehensive policies under one insurer rather than juggling FAIR + DIC combinations.
Over time, as more insurers spread risk evenly, rates could begin to normalize. While coverage in high-risk ZIP codes will always cost more, it should become more predictable and transparent.
Even with new coverage mandates, not all fire-prone homes will pay the same. Insurers will continue to use data-driven models to assess property-level risk factors such as:
Defensible space (distance between structures and vegetation)
Roofing and building materials
Proximity to fire stations and hydrants
Community fire mitigation efforts
This means homeowners who invest in fire-hardening upgrades — like Class A roofs, ember-resistant vents, and defensible landscaping — will still see financial benefits through lower premiums or broader eligibility.
Susman often reminds policyholders:
"You can't control the weather, but you can control your risk profile."
In this new system, homeowners who take proactive steps will be the first to benefit from improved access and pricing.
While the new law is good news for consumers, it presents significant operational and financial challenges for insurers:
Reinsurance costs remain high, as global reinsurers have raised rates for wildfire-prone regions.
Catastrophe modeling remains under CDI review — companies can't yet fully incorporate forward-looking climate data into rates.
Capital allocation may deter national carriers from fully reengaging until they're confident about profitability.
Susman cautioned that even with the 85% mandate, some insurers may proceed cautiously:
"They'll come back, but they'll be selective. They'll test the waters, see how the rate environment develops, and then expand."
That means while coverage will technically be "available," competition might remain limited in the early stages.
Beyond economics, the new insurance rules represent a broader attempt to rebuild trust between regulators, insurers, and homeowners.
For years, each group has blamed the other:
Homeowners accused insurers of abandoning them.
Insurers blamed state regulators for rigid rate controls.
Regulators accused both sides of overreacting.
Now, with the 2025 reforms, all parties are being asked to share responsibility. The state promises more regulatory flexibility, insurers are required to return to the market, and homeowners must continue investing in mitigation.
If successful, this collaboration could serve as a national model for managing insurance crises in climate-sensitive regions.
For Malibu residents like Bruce Silverstein, who lost his home in the Franklin Fire, this policy shift can't come soon enough.
He's currently staying in a rental property while navigating insurance claims and restoration — a process he describes as exhausting but hopeful.
"Hopefully our insurance company will treat us fairly," he said. "We just want to rebuild, move back home, and know we're covered next time."
Under the new rules, homeowners like Bruce could soon have access to full private insurance policies — not just partial FAIR Plan coverage — restoring a sense of security to communities long abandoned by insurers.
California's 2025 insurance mandate marks one of the most ambitious reforms in the nation's property insurance landscape. By compelling carriers to reenter high-risk markets, the state aims to strike a balance between consumer access and financial solvency.
As Karl Susman emphasized, the goal isn't to punish insurers — it's to restore a functioning marketplace.
"When more companies are writing business, rates come down. That's how insurance works."
For millions of Californians living under wildfire threat, the message is one of cautious optimism: coverage is coming back.
But as always in insurance, stability won't happen overnight. It will take collaboration — between homeowners, insurers, and regulators — to turn this policy into lasting protection.
