Published March 6, 2025
BY ZANA BALABAN
Andreas Baer built his home on Palo Colorado Road in Big Sur in 2010, pouring years of hard work and savings into a house designed to stand the test of time–and the threat of wildfires. Since then, he has been dropped by insurance companies three times, each time for the same reason: fire risk.
The first time, Baer reinstalled a mechanically engineered furnace and wrote back to the insurance company disputing the drop, but was forced to find a new carrier. A few years later, it happened again. Then, three years ago, his policy increased by 325% overnight, an increase that neither he nor his escrow company saw coming. He had to scramble to come up with the extra thousands of dollars. Just this January, the resident was dropped again by Traveller’s Insurance via a letter citing a wood siding roof that he doesn’t have.
“The letters aren’t true,” says the resident, who always writes back to prove the safety measures he’s taken, “but they’re looking for any excuse they can to get out of the area.”
(graphic by ZANA BALABAN)
Baer had done everything right. His home is equipped with automatic fire sprinklers covering the house and deck, a 5,000-gallon fire water reserve tank and three fire hydrants with a generator-powered pump system. When the 2016 Soberanes Fire tore through Big Sur, flames licked his backyard–but he never filed a claim–not for wildfire damage, not for the floods that washed out part of his water system, not for the windstorm that shattered his skylights. He says he’s always fixed everything on his own because he’s afraid of being dropped again and relies on insurance only in the case of a catastrophe.
“There’s a feeling of insecurity among the community that’s not comfortable,” Baer says, noting annual policies in his neighborhood that surpass $30,000. “A home is worth nothing without insurance. The way things are going in California, I’m lucky to have insurance at all.”
Not everyone can find a policy, no matter how high. Five years ago, when living with his wife and two daughters in Carmel Valley, Sam Phillips got the letter. His policy with Farmers Insurance, of whom he’d been a customer for ten years, wouldn’t be renewed. When his broker reached out to five other companies, and they all said no, Phillips was left with two options: Go without insurance entirely–a legal option for those without a mortgage–or enroll in the California FAIR Plan, the state’s insurer of last resort.
As a private association representing Fair Access to Insurance Requirements, the FAIR Plan provides state-mandated policies to individuals and businesses who can not find coverage in the regular market. For residents in high wildfire-risk areas, their rates may be the only option.
“The program [Cal FAIR] has gotten so bloated that people are concerned whether they can manage what they’re currently insuring,” says Phillips, whose FAIR Plan rate doubled for 2025 and has been told to expect further skyrocketing. “Who knows what happens if they can’t afford the payouts?”
Across the community, neighbors swap stories of rising premiums and unexpected non-renewals. The most recent California Department of Insurance summary cited over 800,000 non-renewals and cancellations in the state in 2023. But while it’s easy in a crisis to attack the big business, industry experts and representatives deflect the blame of regulatory hurdles and unsustainable losses all the way back to 1988s California Proposition 103, essentially the governing rules that tell insurers how to develop rates.
“For the last eight years in California, we have not made money,” says State Farm freelance contractor Ryan Travaille, citing that Prop 103 and the CDI suppress rate increase requests for up to three years, setting the company 30 or 40% behind where they need to be in terms of premium collections. “That’s why you’re seeing these big, gigantic rate increases, and that’s why insurance companies are not taking on new policies or are leaving the state.”
In May 2023, State Farm followed suit of Allstate and several other major insurers and announced they would not take on new California policyholders. At the same time, the company non-renewed over 30,000 households. Many of these, Travaille notes, were in the Palisades, where the recent wildfires have displaced thousands–a grim warning for regions like Carmel and Big Sur.
“We are not safe,” says Andy Bozzo, Contra Costa County Fire Battalion Chief and long-time Carmel resident. “We have had high wind events, and it’s getting hotter and hotter every year.”
With fire risk ever increasing, the director of strategic communication at the Insurance Information Institute says insurers are not making enough to cover the potential losses.
“For every $1 of premium,” director Janet Ruiz says, “industry averages were paying out over $1.08 in losses and operating expenses. They took the responsible action of limiting the amount of policies they had in the state so that they could pay their claims and expenses.”
In what she calls a no-win situation, insurers are struggling to balance affordability for homeowners with their own financial viability. On Feb. 3, State Farm, the state’s largest insurer with over 8 million policies, asked the CDI for an emergency rate increase averaging 22% for California homeowners. While the community was alarmed, Ruiz found the request anything but startling.
“We, as the insurance industry, don’t control inflation or the cost to rebuild,” she says. “It’s unreasonable to expect the insurance industry to not have to adopt insurance premiums that allow them to pay your claims.” The cost of insurance, Ruiz explains, is necessary. “We all want to have disposable income. But to be honest, when I look at my premiums, I spend more than that per month at Starbucks sometimes.”
This “inadequate system,” as Travaille calls it, is why homeowners like Baer and Phillips are seeing their premiums skyrocket–or, worse, dropped altogether. But the issue is not only affecting current residents, it may also be deterring prospective buyers.
The ripple effect on the real estate market is undeniable, according to Sotheby’s International Realty agent Michele Henderson. The consensus in her Carmel Valley office is that clients are heavily deterred from high-fire areas because of risk and the role of home insurance approval as a contract contingency.
“I’ve never seen this before,” says Henderson, who has been selling homes in Carmel Valley since 2009. “The sales number is actually going down, and with the lack of buyers, a lot of homes are sitting on the market for a while.”
After the Los Angeles fires, Phillips’ real estate agent Melissa Radowicz had buyers who backed out of deals and clients who recently disregarded options in high-fire areas like Carmel Valley, Big Sur, Highway 68 and parts of Carmel entirely.
Courtney Jones, with Carmel Realty Company, has similarly encountered issues with clients’ coverage.
“A few years ago, insurers saying no and the costs of the FAIR Plan scared people,” says Jones, who sees rates from $20,000 to $30,000 in more remote locations. “Now most buyers understand that insurance is expensive and hard to get, and they realize it’s a part of the process.”
For real estate agents and residents alike, this means more time spent finding the right insurance quotes and navigating the maze of regulations.
Also stuck in a maze are legislative changes that would bring major insurance companies back to California, according to Travaille.
The Sustainable Insurance Strategy, with pending approval, is a direct challenge of Prop 103, accommodating the use of catastrophe models in rate setting and allowing faster rate increases which would make insurance companies want to reenter the marketplace. In return, Travaille says, insurers will have to cover 25% of high-risk wildfire zones in California, and Ruiz adds that once adequate rates can be charged, inherently, more policies will be written.
These effects would help take homeowners off the FAIR Plan. Even with State Farm’s proposed rate increases, returning to traditional insurers could lower premium costs.
“Consumers are willing to pay these FAIR Plan costs, which are two to five times the cost of the original policy,” Travaille says. “Just let the original insurance company charge something of that nature.”
The insurance crisis, however, isn’t just about the cost of policies—it’s about the real, growing risk of fire.
“Global warming is real,” says Bozzo, noting the hotter years, longer dry periods and more intense winds. “I’ve experienced a huge uptick in fire frequency and fire intensity in the last fifteen years. There’s no covering up the fact that we’re seeing climate change at an increasing rate, and it’s creating these mega-fires.”
Regardless of whether the home is insured or not, fire prevention and protection measures, he stresses, can be the difference between saving and losing everything.
Radowicz learned this the hard way. She never thought she’d have a $25,000 deductible–but in the wake of being dropped twice in just four years, it was the only option left. She didn’t even realize she could fight back.
Now, the Carmel Valley resident helps community members project their homes as her neighborhood’s board president of Firewise USA. This national program helps communities mitigate wildfire risks by assessing local risk factors, promoting defensible space, creating evacuation plans, and reducing fire hazards, often with state grants. These steps, Radowicz says, can give community members discounts on homeowners insurance and even save them from the FAIR Plan.
“We have been abandoned by the insurance companies,” says Kate Daniels, newly elected Monterey County District 5 Supervisor, who herself pays FAIR Plan premiums. “While we look to our legislators, our governor and our insurance commissioner to make this system work again, let’s do everything we can in our homes and our communities to make them as fire-safe as possible.”
Preventative measures like tree removal, home hardening and metal roofs can be paid for via the redirection of millions of dollars in state budgets. Advocating for the community to get this funding, she says, will be a major focus of her term.
Daniels is also taking action to relax regulations around these safety precautions, which make it harder–sometimes impossible–for residents to get coverage and keep their homes safe.
Carmel-by-the-Sea design guidelines prohibited the installation of metal roofs, which were simultaneously a requirement for standard fire insurance policies. Only the FAIR Plan, Jones points out, will insure the wood shake roofs that the city found “charming.”
“If a fire comes through and all of these wooden roofs burn, and as a result, all of these homes burn, there’s no aesthetic,” says Supervisor Daniels, who’s currently updating the Big Sur Land Use Plan to allow for tree removal in the context of wildfire control.
Barriers against forest management and lowering fire danger are in the process of being lifted, according to Chief Bozzo, and he says the community should continue to do everything they can to protect their homes before the next wildfire comes.
Daniels adds, “You’re only as safe as your neighbors are.”
