As wildfires devastate Southern California, residents of Pacific Palisades are facing a grim reality: their homes are burning, and many of their insurance policies were canceled just months ago by State Farm.
The cancellations, part of a larger strategy to mitigate financial risk, have left over 72,000 homeowners statewide without coverage, with Pacific Palisades—a now-scorched, affluent neighborhood—among the hardest hit.
Actor and Pacific Palisades resident James Woods voiced the frustration on X (Twitter) saying, “Actually, one of the major insurance companies canceled all the policies in our neighborhood about four months ago.”
One resident, whose family home of 75 years succumbed to the flames, shared her anguish with ABC News.
“My parents are 90 years old. They lived in this house for 75 years and had the same insurance policy. Then State Farm decided to cancel it. They’re now left with nothing. Thank you, California insurance companies, for abandoning taxpaying residents who love this state. And they wonder why people are leaving California in droves,” she said.
A video circulating on social media further underscored the crisis, with countless reports of insurance cancellations emerging just weeks before the fires. Many residents have turned to the state-run FAIR Plan, an insurer of last resort, as their only option.
State Farm’s mass cancellations were part of a broader decision announced in March 2024 to cease issuing new homeowners’ policies in California.
In an official statement, State Farm explained:
“This decision was not made lightly and only after careful analysis of State Farm General’s financial health, which continues to be impacted by inflation, catastrophe exposure, reinsurance costs, and the limitations of working within decades-old insurance regulations.”
The company began rolling out policy non-renewals in July 2024, affecting approximately 30,000 homeowners and 42,000 commercial apartment policies. For Pacific Palisades, the decision left about 1,600 homes without coverage.
State Farm’s withdrawal is emblematic of a broader trend in California’s property insurance sector. Over the past three years, multiple private insurers have scaled back coverage in high-risk areas, citing increasing wildfire dangers and regulatory constraints.
This retreat has fueled enrollment in the California FAIR Plan, which now covers over 452,000 properties—more than double its enrollment in 2020. While the FAIR Plan offers a safety net, it is often more expensive and provides limited coverage compared to private insurance.
Insurers argue that they are unable to set premiums that reflect the true risk of operating in wildfire-prone areas. Governor Gavin Newsom’s administration has faced criticism for its handling of insurance and wildfire policies, with even President-elect Donald Trump demanding he resign as governor of California.