California HOA Wildfire Insurance Crisis: What Boards Must Do Now

If your HOA board hasn't had a difficult conversation about wildfire insurance in California lately, it's time. Major insurers have stopped writing new policies in the state. Premiums are skyrocketing. And the safety net — the California FAIR Plan — was never designed to carry this many communities.

Here's what's happening, what it means for your HOA, and exactly what your board should do about it.

Why California's Biggest Insurers Are Walking Away

The numbers tell a stark story. In 2023 alone, three of California's largest property insurers made headlines:

• State Farm announced it would stop accepting new homeowner applications in California, citing wildfire exposure, rising construction costs, and reinsurance prices.
• Allstate quietly paused new homeowner policy sales across the state.
• Farmers Insurance non-renewed tens of thousands of California policies, many in wildfire-prone areas.

They aren't the only ones. Across the state, insurers have been reducing their California wildfire exposure since the devastating fire seasons of 2017 and 2018. The Camp Fire alone caused over $12 billion in insured losses.

Then came January 2025. The Palisades and Eaton fires tore through Los Angeles, causing an estimated $30–50 billion in insured losses. For insurers still on the fence about California, those fires pushed many toward the exit.

The Root Causes

Several forces are driving this crisis:

1. Proposition 103 requires insurers to get prior approval before raising rates. For years, this kept premiums affordable — but also prevented insurers from pricing policies to reflect true wildfire risk.
2. Reinsurance costs surged globally after 2020. California insurers historically couldn't pass those costs to policyholders.
3. Climate change has extended fire seasons and made fires more intense.
4. More homes in the Wildland-Urban Interface (WUI) mean more structures exposed to wildfire.

In response, Insurance Commissioner Ricardo Lara launched the Sustainable Insurance Strategy in late 2023. The strategy allows insurers to use forward-looking catastrophe models for rate-setting and factor in reinsurance costs — in exchange for committing to write policies in high-risk areas. It's a step forward, but coverage gaps remain deep as of early 2026.

What the FAIR Plan Can (and Can't) Do for Your HOA

When your HOA can't find coverage on the open market, the California FAIR Plan is the backstop. But it has serious limitations that every board member should understand.

The FAIR Plan is not a government agency. It's a private association of every property insurer licensed in California, created in 1968 to provide basic fire insurance when no one else will. Policies have more than tripled in recent years, and total exposure has reportedly exceeded $300 billion.

⚠️ Warning: The FAIR Plan provides basic fire coverage only. It does not include liability, theft, water damage, or the comprehensive coverage your HOA likely needs.

FAIR Plan Limitations for HOAs

• Fire-only coverage: No liability, no water damage, no theft
• Higher premiums: Typically two to three times more than the voluntary market
• Temporary by design: It's meant as a stopgap, not a long-term solution
• Requires a DIC policy: To approximate full coverage, your HOA needs a separate Difference in Conditions (DIC) policy — which adds cost and complexity
• Assessment risk: If FAIR Plan losses exceed its reserves, every insurer in California could face assessments — which get passed to all policyholders

If your HOA is currently on the FAIR Plan, that's understandable. But your board should be actively working toward returning to the voluntary market.

Your HOA's Legal Obligations: Insurance Isn't Optional

California law doesn't give HOA boards a choice about insurance. Under the Davis-Stirling Common Interest Development Act (Civil Code §5806), your HOA must maintain property insurance covering common areas and structures at full replacement cost.

Most CC&Rs go further, requiring:

• Property and fire insurance on all buildings and common areas
• General liability insurance
• Directors and Officers (D&O) liability insurance
• Fidelity bonds or crime insurance

ℹ️ Note: Failure to maintain required insurance is a breach of fiduciary duty. Board members could face personal liability if the community suffers an uninsured loss.

Key Protections You Should Know

California has passed several laws to protect property owners during the crisis:

• Insurance Code §675.1: After a declared wildfire, the California Department of Insurance (CDI) can impose a one-year moratorium on policy non-renewals in affected ZIP codes.
• SB 894 (2018): Extended the replacement cost collection window to 36 months after a state of emergency and required 24 months of additional living expense coverage (extendable to 36 months).
• SB 505 (2023): Expanded the FAIR Plan's clearinghouse program to commercial and condo policies, helping transition FAIR Plan policyholders back to the voluntary market.

These protections help, but they don't solve the underlying availability problem. Your board needs to be proactive.

6 Steps Every HOA Board Should Take Right Now

1. Audit Your Current Coverage

Pull out your master insurance policy and review it line by line. Check:

• Replacement cost limits: Are they current, or were they set years ago when construction costs were lower?
• Exclusions: What's specifically excluded? Wildfire? Earthquake? Flood?
• Deductibles: Have they increased at your last renewal?
• Coverage gaps: Is your liability coverage adequate? Is your D&O policy current?

💡 Tip: Request a copy of your HOA's insurance summary from your property manager or broker. Every homeowner has the right to review it.

2. Watch for Non-Renewal Notices

Under California law, insurers must provide at least 75 days' advance notice before non-renewing a policy. If your HOA receives one, don't panic — but act fast.

Start shopping for alternatives immediately. The worst position is discovering your coverage lapsed because no one opened the mail.

3. Hire a Commercial Insurance Broker Who Specializes in HOAs

This is not the time for a generalist. You need a broker who:

• Understands California HOA and condo association insurance
• Has relationships with surplus lines carriers
• Knows how to structure FAIR Plan + DIC combinations
• Can navigate the current hard market

A specialist broker is your single best investment right now.

4. Explore FAIR Plan + DIC Coverage as a Bridge

If the voluntary market won't cover your community, a FAIR Plan policy combined with a Difference in Conditions (DIC) policy can fill the gap. The FAIR Plan handles basic fire coverage. The DIC policy adds liability, water damage, and other perils.

It costs more, and it's more complex to manage. But it keeps your HOA compliant and protected while the market stabilizes.

5. Invest in Wildfire Mitigation

Insurers are more likely to write — or continue — your coverage if your community actively reduces wildfire risk. Practical steps include:

• Defensible space: California law (PRC §4291) requires 100 feet of defensible space around structures. Make sure your HOA enforces this on common areas.
• Home hardening: Class A fire-rated roofing, enclosed eaves, tempered glass windows, and ember-resistant vents.
• Vegetation management: Regular clearing of brush and dead vegetation in common areas.
• Firewise USA certification: The NFPA's community recognition program. Some insurers offer discounts for Firewise communities.

💡 Tip: Document everything. Photos, receipts, contractor reports. When your broker shops your coverage, a wildfire mitigation portfolio makes a real difference.

6. Plan for Rising Costs in Your Budget

Insurance is no longer a static line item. Boards should:

• Update your reserve study to reflect current and projected insurance costs
• Consider special assessments if premiums have jumped significantly
• Review annually: Don't auto-renew without shopping the market
• Explore purchasing groups: Some HOA trade associations negotiate group rates that individual communities can't access

The HOAs that plan ahead will weather this crisis. The ones that don't may face coverage gaps, legal exposure, and angry homeowners at the annual meeting.

The Bottom Line

The wildfire insurance crisis in California isn't going away soon. The Sustainable Insurance Strategy may eventually bring insurers back, but that process will take years. In the meantime, HOA boards have a fiduciary duty to protect their communities — and that starts with understanding the problem, taking action, and making informed decisions about coverage.

Your board doesn't need to solve California's insurance market. But it does need to make sure your community isn't caught without a policy when the next fire season arrives.

Managing an HOA through California's insurance crisis takes organization, documentation, and clear communication with your community. See how Propty simplifies HOA management →

*Related reading:*

• 2026 California HOA Compliance Calendar
• SB 326 Balcony Inspection Requirements: What Your HOA Needs to Know
• How to Run a Self-Managed HOA in California