Why is homeowners insurance harder to get in California right now?

Several major insurers pulled back from writing new California policies starting in 2023, driven by wildfire claim costs and California's rate approval process. The January 2025 LA fires accelerated that pullback. The result is fewer standard-market options, higher premiums, and in some areas the FAIR Plan as the only available coverage.

What is the California FAIR Plan and is it enough for a real estate transaction?

The FAIR Plan is California's insurer of last resort. It provides basic fire coverage but is typically more limited than a standard policy. Most lenders require a Difference in Conditions policy alongside the FAIR Plan to meet their coverage requirements. If a seller is on the FAIR Plan, it is generally best to disclose it to buyers.

Can a Westside LA home sale fall through because of insurance?

Yes. If a buyer cannot secure homeowners insurance at a price that fits their budget, their lender will not fund the loan. This has become a real risk even in flat coastal neighborhoods like Playa del Rey and Mar Vista, where premiums have risen even though wildfire risk is lower than in hillside areas.

Should I disclose my insurance situation to buyers when selling?

In California, known material facts about a property must be disclosed. If you are on the FAIR Plan, have received a non-renewal notice, or have had prior claims that affected your coverage, those are likely material facts. When in doubt, disclose. Disclosing them early avoids problems during escrow.

Which Westside LA neighborhoods are at higher risk for insurance problems?

Hillside and canyon areas, and areas adjacent to open land, face more insurer scrutiny than flat coastal neighborhoods. Playa del Rey, Marina del Rey, Mar Vista, Westchester, and Del Rey generally carry lower wildfire risk, but premiums have risen across California regardless of specific zone designation.

When should a buyer get an insurance quote during the home purchase process?

Before you remove your inspection contingency. Getting a quote early lets you factor the premium into your true cost of ownership, and gives you time to shop multiple insurers if the first quote is too high. Waiting until closing to check on insurance is how buyers end up with a last-minute financing problem.

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2026-08-20 · 5 min read · Playa del Rey

California Home Insurance and Westside LA Real Estate: What Buyers and Sellers Need to Know

Insurance policy document on a white desk with a magnifying glass, cash, and a small model car

Where this starts

California's homeowners insurance market has been changing for several years, and the changes are now showing up at the closing table. Deals fall apart. Buyers lose financing. Sellers get caught off guard by questions they were not expecting. If you are buying or selling a Westside LA home in 2026, you need to understand what is happening and how it affects your transaction.

This article covers what is different now and what practical steps buyers and sellers can take to avoid a deal-killing insurance surprise.

What changed in California's insurance market

Several major insurers have significantly reduced or paused their California homeowners insurance business in recent years. State Farm stopped writing new homeowners policies in California in 2023. Other carriers followed with similar restrictions on new policies or renewals in certain areas. The decisions were driven by the cost and frequency of wildfire claims and by California's regulatory environment, which limits how quickly insurers can adjust rates in response to their loss experience.

The result is that many California homeowners, particularly those in or near wildfire-designated zones, are finding their policies non-renewed or having difficulty getting coverage from a standard-market carrier. Buyers who need insurance to close their loan sometimes find the property harder to insure than they anticipated, which creates a real risk to the transaction.

The FAIR Plan: what it is and what it is not

The California FAIR Plan is the state's insurer of last resort. It is available to homeowners who cannot get coverage through the standard market. The FAIR Plan provides basic fire coverage, but it is typically more limited in scope and more expensive than a standard homeowners policy. Buyers using the FAIR Plan often need to purchase a separate Difference in Conditions policy alongside it to get the level of coverage most mortgage lenders require.

If a seller is currently on the FAIR Plan, that may be a material fact about the property's insurability. When in doubt, disclose it. Buyers should ask whether the property has had difficulty with standard-market insurance and should get insurance quotes before they remove their contingencies.

How insurance affects real estate deals in practice

Most mortgage lenders require proof of homeowners insurance before they will fund a loan. If a buyer cannot secure coverage at a price that fits their budget, the deal does not close. This is a newer risk for parts of California that were not historically considered high-risk for wildfire.

The January 2025 fires in Pacific Palisades and Altadena significantly affected the entire Los Angeles insurance market, not just the areas that burned. Carriers reassessed their California exposure broadly after those events. Buyers and sellers in neighborhoods that were not directly affected are still operating in a market where insurance costs more and is harder to get than it was three years ago.

For sellers, this means that a well-priced, well-prepared home can still fall out of escrow if the buyer's lender requires insurance that turns out to be difficult or expensive to obtain. Anticipating that possibility before you list is smarter than discovering it in week three of escrow.

What sellers should do before listing

Know your own policy status. If you have received a non-renewal notice or if you are currently on the FAIR Plan, talk with me about including it in your disclosures. When in doubt, disclose, because concealing a known material fact from a buyer can create real liability in California.

If your home has features that attract insurer scrutiny, be aware of them upfront. A wood shake roof, older wiring, a property adjacent to open space or hillside, or prior claims on the home can all affect insurability. You do not need to fix everything before listing, but you should know what a buyer will find when they shop for coverage.

In your listing, make visible any fire safety features the home has. An updated electrical panel, fire-resistant roofing, defensible space, and ember-resistant vents are items insurers weigh. Making these clear in the listing reduces friction for the buyer and reduces the chance of an insurance surprise in escrow.

For a broader look at seller disclosure requirements in California, read California seller disclosures for Westside LA home sales.

What buyers should do before making an offer

Get an insurance quote before you remove your inspection contingency. Do not assume coverage will be available at a price that fits your budget. An insurance agent who works with California properties can give you a realistic estimate based on the specific address, age, construction type, and claims history of the home you are considering.

Check whether the property is in a state-designated Very High Fire Hazard Severity Zone. This information appears on the Natural Hazard Disclosure report that California sellers provide. Properties in designated fire hazard zones face greater insurer scrutiny and often higher premiums. For more on homeowners insurance basics in Westside LA, read what to know about homeowners insurance in Westside LA.

If you are buying in cash, insurance is still essential protection for the asset. The cost of a fire loss without coverage is the full replacement value of the home.

The flat Westside vs. the hills: different risk profiles

The flat coastal neighborhoods of Westside LA, including Playa del Rey, Marina del Rey, Mar Vista, Playa Vista, Westchester, Del Rey, and Culver City, generally carry lower wildfire risk than hillside or canyon areas. Standard-market insurance is more available in these areas, and premiums are typically lower than in designated fire hazard zones. Even so, carriers are pricing in a broader California exposure than they did before 2020, and buyers in coastal areas are still seeing higher premiums than a few years ago.

If you are selling or buying in a hillside area, insurance disclosure and pre-sale preparation become more important. Get ahead of it before you are in escrow. A seller who surfaces the insurance situation early, with documentation of the home's fire safety features and its current policy status, moves through escrow more smoothly than one who lets the buyer discover it at the contingency deadline.

Straightforward answers before you get surprised in escrow

Insurance is one of several things that can complicate a real estate transaction in California right now. It is manageable when you see it coming. It is much harder when it surfaces in week three of escrow and your buyer's lender is asking questions you were not prepared for.

I give sellers and buyers the full picture before we start. If you want a conversation about your specific property or a home you are considering, book a consultation. I stay in touch, and I give real answers.

Where to start

Knowing which house is a good idea and which is not is the whole job. That is what I do for buyers in Playa del Rey at First Key Pacific. When you are ready to start, send me a note.

Common questions

Why is homeowners insurance harder to get in California right now?: Several major insurers pulled back from writing new California policies starting in 2023, driven by wildfire claim costs and California's rate approval process. The January 2025 LA fires accelerated that pullback. The result is fewer standard-market options, higher premiums, and in some areas the FAIR Plan as the only available coverage.
What is the California FAIR Plan and is it enough for a real estate transaction?: The FAIR Plan is California's insurer of last resort. It provides basic fire coverage but is typically more limited than a standard policy. Most lenders require a Difference in Conditions policy alongside the FAIR Plan to meet their coverage requirements. If a seller is on the FAIR Plan, it is generally best to disclose it to buyers.
Can a Westside LA home sale fall through because of insurance?: Yes. If a buyer cannot secure homeowners insurance at a price that fits their budget, their lender will not fund the loan. This has become a real risk even in flat coastal neighborhoods like Playa del Rey and Mar Vista, where premiums have risen even though wildfire risk is lower than in hillside areas.
Should I disclose my insurance situation to buyers when selling?: In California, known material facts about a property must be disclosed. If you are on the FAIR Plan, have received a non-renewal notice, or have had prior claims that affected your coverage, those are likely material facts. When in doubt, disclose. Disclosing them early avoids problems during escrow.
Which Westside LA neighborhoods are at higher risk for insurance problems?: Hillside and canyon areas, and areas adjacent to open land, face more insurer scrutiny than flat coastal neighborhoods. Playa del Rey, Marina del Rey, Mar Vista, Westchester, and Del Rey generally carry lower wildfire risk, but premiums have risen across California regardless of specific zone designation.
When should a buyer get an insurance quote during the home purchase process?: Before you remove your inspection contingency. Getting a quote early lets you factor the premium into your true cost of ownership, and gives you time to shop multiple insurers if the first quote is too high. Waiting until closing to check on insurance is how buyers end up with a last-minute financing problem.