California’s New Insurance Mandate for Wildfire Zones: A Lifeline for Homeowners

Mapping the Risk

The newly released maps are a crucial element of the CDI’s regulatory approach. They outline the areas where insurance companies must increase their market presence. These include all of far northern California, nearly all of the Sierra Nevada, significant parts of the Bay Area such as Napa and Marin counties, most of the Central Coast, and various pockets in Southern California. These regions are identified based on their fire hazard level, using the latest Cal Fire hazard maps, and other metrics such as the “affordability index,” which assesses insurance costs relative to local incomes.

To balance this increased coverage requirement, California will permit insurers to use forward-looking catastrophe models. These models account for the impacts of climate change on future wildfire risks and incorporate measures taken to mitigate these risks. This approach is expected to result in higher insurance rates, but it aims to create a more resilient insurance market capable of weathering the increasing threat of wildfires.