California Man Loses Home to Fire Just Weeks After Insurance Cancellation
A homeowner in Cathedral City, California lost his home to a fire just weeks after his insurer cancelled his policy.
Homeowners across the Golden State are grappling with insurance cancellations. State Farm made headlines for cancelling 70,000+ policies statewide last year. Just months later, many of those homes were destroyed in the January 2025 Los Angeles fires.
As reported by Shay Lawson of KESQ, Cathedral City homeowner Victor Estrada is now living in his car after losing his house to a fire.
Earlier this month, Estrada’s insurance company cancelled his policy. He searched for replacement insurance but was unable to afford it due to the high cost.
A few weeks later, Estrada’s home was severely damaged in a multi-structure fire affecting two duplexes in Cathedral City. The cause of that fire is under investigation.
California Homeowners Paying 50% Higher Rates for Homeowners Insurance
Estrada is one of many California homeowners grappling with higher premiums.
As reported by Shay Lawson and KESQ, Coachella Valley homeowners are paying 25% to 50% higher rates for homeowners insurance alone.
Californians could pay even higher rates in the future. Under California insurance code, insurers can only raise rates a certain amount per year without a public hearing.
State Farm recently asked the Department of Insurance for a rate hike of around 30%, and other insurers are likely to follow.
Last month, the Department of Insurance approved State Farm’s rate hike at a smaller amount: around 17% for the average homeowner. However, State Farm continues to pursue an additional 11% rate hike to get closer to the 30% hike it initially required.
Insurers Are Cancelling Policies Across California
State Farm is the largest property insurer in California, covering around 20% of homes statewide.
If insurers are unable to raise rates to match risk, they could leave California entirely.
In April 2024, State Farm announced it had cancelled around 72,000 policies across California, including 30,000 policies for homes. 1,600 of those cancellations were for homes in the Pacific Palisades area of Los Angeles – one of the areas hardest hit by the January 2025 wildfires.
Those cancellations push homeowners to California’s FAIR Plan, which is the insurer of last resort. California homeowners unable to obtain insurance from the open market can use the FAIR Plan to get coverage. The number of FAIR Plan policies doubled between 2020 and 2024 and now covers around 450,000 homes statewide.
What to Do When Your Insurer Cancels Your Policy
If your insurer cancels your policy, it may seem like the end of the world.
Fortunately, you have options:
Option #1: Determine the Reason for Cancellation – and Check If There’s a Way to Fix It
Sometimes, insurers may cancel policies with zero warning. You receive a notice a few weeks before your renewal date indicating your insurer will not renew your policy.
In other cases, however, your insurer may tell you to fix certain things – like an overhanging tree or broken siding – to continue with coverage.
Check the cancellation notice. See if there’s a way to fix the underlying risk issue. Contact your insurer to clarify the cancellation.
Option #2: Shop Around with Other Conventional Providers
Even in high-risk areas, you may have multiple options for insurance. Shop around with other providers. If State Farm cancelled your policy, then another major insurer could be willing to cover you.
Insurers calculate risk in different ways. Some insurers like having a mix of low-risk and high-risk homes in their pool. Others skew towards one level of risk or another. By shopping around, you could find better insurance at a cheaper price.
Option #3: Request a Quote from the Insurer of Last Resort & Alternative Providers
California, like many states, has an “insurer of last resort.” If you’re unable to buy insurance from the open market, then you contact the insurer of last resort to get coverage.
California has the FAIR Plan, which is a non-governmental organization run by a collection of private insurers. The FAIR Plan, as mentioned above, covers around 450,000 homes across California – including homes in high-risk areas.
Or, some homeowners and business owners are turning to the excess and surplus market to get the coverage they need. As Insurance Business explains, the excess and surplus insurance market is “booming” in California because standard insurers are pulling out.
Option #4: Go Without Insurance
Some homeowners are choosing a fourth option: abandoning insurance altogether.
If you have a mortgage on your home, then your lender requires you to have insurance. Insurance protects the collateral of the loan: the home. If you fail to carry insurance, then you will be in violation of your mortgage. Your lender will typically buy insurance for you, then pass the costs onto you – and you’ll ultimately pay higher rates than you would on the open market.
If you don’t have a mortgage on your home, however, and you own your home outright, then you could accept the risk and drop coverage entirely.
Option #5: Rely on Government Programs After a Loss
If you go without insurance, then you may still have some type of safety net after a loss.
Some homeowners rely on government programs for additional assistance. As explained by Shay Lawson of KESQ, the Small Business Administration can help with low-interest disaster loans, even if you’re not a business owner. Homeowners can look into their local SBA or SBA website to see if they qualify for assistance.
FEMA, HUD, and the Red Cross also provide assistance to homeowners after a loss. Some homeowners may also qualify for FHA 203k rehab loans. All of these options could help you rebuild your life after a loss with or without insurance.
