‘My Home Burned Down in the Palisades Fire—Here's What No One Tells You About Insurance'

Yahoo

11-05-2025

After the housing market was transformed first by record-low mortgage rates, then by inflation and cooling demand, real estate is going through yet another transformation. This time, it's driven by rising home insurance premiums.
In regions at a high risk of natural disaster, rates are skyrocketing and policies are disappearing altogether as insurers drop longtime and new customers alike to reduce their exposure. From 2019 to 2024, more than 100,000 California homeowners lost coverage, according to research from the Public Policy Institute of California.
The emotional whiplash of paying into a policy for years, only to be denied coverage when it's needed most, has left many homeowners disillusioned. For Claire O'Connor, a Los Angeles real estate agent and homeowner, the devastation became deeply personal.
'I literally said to my husband when we got dropped [in November 2024],' she recalled in an interview with Realtor.com®. ''As if our house is going to burn down … so many houses would have to burn to get to our house…' We were so far from the hills.'
Then, just two months later, the unthinkable happened. O'Connor lost her home in the Palisades fire, one of more than 4,700 homes partly or entirely destroyed.
The experience didn't just reshape her understanding of risk. It changed how she guides her clients, how she talks about homeownership, and how she approaches home insurance.
After a disaster, many homeowners assume their insurance will kick in automatically, offering the financial support needed to rebuild and recover. But for O'Connor, and many of her clients, filing a claim turned out to be almost as stressful as losing the home itself.
'The insurance process has been horrible,' she says. 'You get a check, and then you have to co-sign it with your bank if you have a mortgage, and it goes into an escrow account.'
Rather than providing immediate relief, many insurance payouts are tangled in red tape. In place of a lump sum, homeowners are handed a process. One that often requires heaps of paperwork and documentation, and even quotes from contractors before releasing funds to start work, she says.
For many, that has meant delays in rebuilding, frustration navigating insurer demands, and confusion over what exactly is covered—and what isn't.
As both a homeowner affected by wildfire and a real estate agent helping others pick up the pieces, O'Connor has a rare window into all sides of the recovery process.
'Some insurance companies have been better than others,' she says, adding that all of her clients have had different experiences.
In an ironic twist, those whose homes survived the fire aren't necessarily better off.
'People with houses that are still standing are basically being told they need to move back. They're not going to have their living expenses covered.'
But those homeowners are wary about returning. Lingering toxins and structural damage are real concerns, especially for families with young children. Yet insurance policies often offer little flexibility when a home is technically habitable.
'Especially people with small kids, it's like, 'Of course, I'm not going to move back,'' says O'Connor, who is also a mother. 'So they're kind of on their own to cover their living expenses.'
Insurance hurdles remain steep even for those looking to relocate within the region.
'We have a client … he said he pays $3,000 a year in Arizona, and he got a quote [in Los Feliz] for $40,000 to $50,000.'
It's a stark illustration of how wildfire risk is reshaping not just recovery, but also the very feasibility of living in certain parts of California.
Premiums are soaring across the country—and not just in California.
The average annual premium jumped $648 from 2019 to 2024, a 24% increase, which outpaced the 13% inflation rate during that time. And premiums rose in Utah (59%), Illinois (50%), Arizona (48%), and Pennsylvania (44%), according to an April 2025 report by the Consumer Federation of America.
'Insurance is really high everywhere, because it can really get to you anywhere,' says O'Connor.
For buyers navigating this terrain, preparation and prevention are critical. That starts with understanding what insurers look for.
'We work with a great broker. … He has helped us understand what insurance companies look for,' O'Connor says. She points to having a metal roof or fire-hardening around the house (like a gravel belt) as steps that can bring your cost down.
'Any proximity to brush, just forget it,' she adds.
Still, much of Los Angeles and other vulnerable regions remain in what insurers classify as 'very high fire severity zones.' That means elevated premiums are often a starting point, with risk mitigation efforts offering only modest relief.
The takeaway for buyers? The old way of thinking about home insurance, set it and forget it, no longer applies. Prevention is now pricing power, and understanding your property's risk factors before you buy could make or break your long-term budget.
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