The cost of living continues to rise for all Americans, but in wildfire-ravaged California, it’s not just grocery and utility prices that are soaring.
Take Debby Kirkwood, a Fallbrook resident who recently received a $13,163 insurance bill from Farmers Insurance, her long-time insurer. Since 2019, Kirkwood’s insurance premiums have sky-rocketed by 900%.
Shop Top Mortgage Rates
Powered by Money.com – Yahoo may earn commission from the links above.
Her story is a stark illustration of California’s deepening insurance crisis and a cautionary tale of how climate-fueled catastrophes like wildfires, landslides, and earthquakes are pushing residents to the financial brink.
But what’s driving these soaring premiums? And more importantly, what can homeowners do to protect themselves from painful bills in disaster-prone areas?
Kirkwood, a retired public defender, was stunned when her annual premium jumped from $2,375 in 2024 to $13,163 in 2025 — nearly a 400% year-over-year increase, and a 900% increase since 2019.
“Initially, I thought ‘oh, they must have made a mistake,’” Kirkwood told ABC 10 in San Diego, California. “I told them I’ve been a good customer. I’ve been with you for 17 years and never filed a claim. I have my life insurance with you. I have my auto insurance with you.”
The increase came despite Kirkwood living in a gated seniors community, just minutes from the local fire station, with proactive fire mitigation measures in place — including a sprinkler system and multiple water hoses.
“I’m on Social Security and a pension, and my husband works for the county,” she added. “So we’re not rich.”
While Farmers declined to speak about Kirkwood’s specific case, company spokesperson Carly Kraft said that premiums are calculated using a range of factors, including:
-
Historical loss data
-
Wildfire risk
-
Construction type
“These and other factors, combined with inflation adjustments, are reflected in customer rates,” Kraft said in a prepared statement. “It’s important to understand rates are designed to reflect risk level.”
It’s been a rough year for Farmers Insurance from a consumer standpoint. The company scored 678 out of 1,000 in the 2025 US Insurance Digital Experience Study by JD Power — far below the industry average of 699 and 48 points below the top performer, Nationwide.
Read more: Nervous about the stock market in 2025? Find out how you can access this $1B private real estate fund (with as little as $10)
Kirkwood’s case is not an outlier. California’s homeowners insurance market is in turmoil, with thousands of residents facing unaffordable hikes.
Some major providers — including Allstate and Nationwide — have stopped writing new homeowners policies in the state altogether. And even California’s FAIR Plan — the “insurer of last resort” for property owners in California who are unable to secure conventional insurance coverage is under strain. Premiums are skyrocketing and the funds are running dry.
“The system isn’t working. It hasn’t been working for decades,” Madison Voss, a spokesperson for the California Department of Insurance, tells ABC 10 “That’s why we are building a path forward. We have to first address availability and then address affordability.”
The crisis is not limited to California. Insurance industry experts at Insurify are projecting homeowners insurance to rise by an average of 8% nationwide this year.
“It’s really a much more national story,” Benjamin Keys, a professor of real estate and finance at the University of Pennsylvania’s Wharton School, told CNBC recently.
“We’re seeing states like Vermont with rising costs related to recent floods, he added. “We’re seeing states like Colorado, which historically was a middle-of-the-pack state when it came to the cost of insurance, seeing rapidly increasing insurance costs due to recent wildfires, and increased hailstorms in many parts of the Midwest.”
As premiums continue to rise nationwide, it’s never been more important to take proactive steps to reduce your monthly insurance bill. Here are some useful tips to help you reduce your homeowner’s insurance premium:
-
Increase your deductible: Raising your deductible can reduce your premium, as you take on a greater share of the financial risk. A deductible is the amount you pay out-of-pocket before your insurance covers a claim.
-
Bundle policies: Combining multiple policies with one insurer might open you to a lower rate or a discount.
-
Make your home more disaster-proof: Create a defensible space around your home by clearing flammable vegetation, adding storm windows (where applicable), or improving flood defenses.
-
Hunt for discounts: Check with your insurance provider to see if they offer discounts for a good claims history, energy-efficient upgrades, or discounts for smart home technology like lock, water leak, gas leak, and freezing pipe detectors.
For people like Kirkwood, the situation remains bleak. Experts say California’s new “catastrophe modeling” rules — which aims to make rates more accurate and the market more stable — could still lead to further premium hikes in high-risk areas.
But for now, the message to homeowners is clear: Even if you’ve never made a claim, your next insurance renewal might come with sticker shock.
Stay in the know. Join 200,000+ readers and get the best of Moneywise sent straight to your inbox every week for free. Subscribe now.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
