SACRAMENTO — Several major insurance carriers have announced additional market withdrawals or coverage restrictions in California in early 2026, deepening a crisis that is leaving homeowners in fire-prone areas without affordable coverage options and threatening the stability of the state's property insurance market.
Allstate, State Farm, and Farmers Insurance have all announced significant reductions in their California homeowner's insurance portfolios in the past 18 months, citing the increasing cost of wildfire losses and the difficulty of pricing risk accurately in a rapidly changing climate. Several smaller carriers have exited the California market entirely.
Homeowners who cannot obtain coverage from private carriers are being forced into the California FAIR Plan — the state's insurer of last resort — which provides basic fire coverage but does not offer the comprehensive protection of a standard homeowner's policy. FAIR Plan enrollment has increased by more than 60 percent in the past two years.
California Insurance Commissioner Ricardo Lara has implemented emergency regulations requiring carriers to offer coverage in wildfire-affected areas as a condition of doing business in the state, and has proposed new regulations that would allow carriers to use catastrophe models — rather than historical loss data — to set rates.
The insurance crisis has significant implications for the restoration industry in California. Homeowners without adequate insurance coverage may be unable to fund professional restoration work after a wildfire, leading to incomplete remediation and long-term property degradation. Several restoration companies have developed financing programs to help uninsured or underinsured homeowners access restoration services.
