California homeowners located in areas most vulnerable to wildfires are finding it increasingly difficult to find or afford wildfire insurance, according to a December 2017 report by the California Department of Insurance (CDI).

Since wildfires in the state claimed 3,000 structures including 1,700 homes in September 2015, CDI has seen a rise in complaints from homeowners in high-risk areas that insurance has been unaffordable or difficult to obtain.

Compounding the problem further, in October, wildfires ravaged the northern part of the state, damaging or destroying 14,700 homes and 728 businesses totaling $9 billion insured damages (and counting), in what the report deemed “the most destructive fires in the history of the state, in terms of the number of structures destroyed.” Moreover, the expansive Southern California “Thomas fire” in December was recorded as the state’s largest ever, scorching 273,000 acres and claiming around 1,000 structures, according to the Los Angeles Times.

“More and more homeowners who cannot afford insurance may decide to go uninsured, risking their life savings and ultimately seeking relief from the state and federal governments,” the report warned.

According to the report there are 3.6 million California homes located in the “wildland–urban interface” (WUI) — or areas built close to land vulnerable to wildfires — and 1 million of those homes are “high” or “very high” risk. It’s in these areas where homeowners are facing rising premiums or renewal issues with their insurers, the report said. CDI recommended a new legislative framework to better regulate the wildfire-risk models used by insurers and to improve access to insurance policies for homeowners in the WUI.

“Insurers are increasingly using computer models to assess the risk of fires for individual homes and deciding that homes in some areas face too high a risk,” said California Insurance Commissioner Dave Jones in a statement. “In the wake of last year’s wildfires, we may see more areas of the state where insurers decline to write. The legislature has given insurers broad latitude to decide whether and where to write fire insurance; therefore we are recommending new laws to improve fire insurance availability.”

The extensive wildfires also present growing challenges for homebuilders in a state desperately in need of more housing.

“Californians are facing more severe, more unpredictable and more frequent wildfires,” said Jones in a statement. “Add to the equation, increasing development in areas more vulnerable to fire and you can see why wildfires are now an everyday threat to life and property for Californians.”

According to’s director of economic research, Javier Vivas, after the initial “darker picture” of last year’s wildfires, positive changes can come out of the events for the real estate industry.

“It could enhance affordability and get other areas thinking about ‘how do we better tackle what buyers want,'” said Vivas. “We are going to get in touch with planners — there is a good enthusiasm about it this year, it will be interesting to see what happens.”

California is a special case when it comes to construction and affordability, said Vivas. The state has big populations centers and a strong economy but imbalanced supply and demand for housing, which has pushed prices to a certain level.

“Our hope is that we will see new construction pop up pretty quickly, not just in the North Bay but down in Southern California where there is also a big population,” said Vivas, who is based in Santa Clara, California.

Vivas is hoping there will be more discussion about what kind of housing stock is needed by cities such as Santa Rosa, which lost over 5,000 homes in the North San Francisco Bay wildfires. “The market definitely needs housing supply in the mid to low end,” said’s director of economic research.

The type of housing product that areas like Santa Rosa need are higher density, town-home models, for instance, which target the mid-income level homeowner, said Vivas.

Email Gill South.

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