Stabilizing Home Insurance and Enhancing Wildfire Resilience for Existing California Homes

Authors:
Smitha Buddhavarapu, former Project Policy Analyst
Zack Subin, Affiliate

California’s home insurance premiums are escalating as climate-linked disasters worsen the state’s housing shortage and affordability crisis.^[1] However, recent research and new open data sources provide promising resources for state policymakers to build on recent policy progress.^[2] This commentary reviews these opportunities and identifies areas where further policymaking and research could be helpful.

To estimate the financial risk to California’s existing housing stock and gauge the magnitude of the challenge facing the state, we used CarbonPlan’s newly available Open Climate Risk, the first open-source, parcel-level dataset on wildfire risks to U.S. buildings based on published scientific research.^[3]

We estimate that climate change will increase statewide annual expected losses to owner-occupied homes 85 percent by 2047, compared with recent years (Figure 1).^[4] In some census tracts, these annual expected losses run into the tens of millions of dollars—representing what homeowners might need to pay in annual insurance premiums merely for insurers to break even. These annual losses represent the average expected over many years throughout the state: a typical year would see no losses in most locations, while an extremely bad year would see much larger losses than shown in Figure 1, in areas affected by severe wildfires.

Figure 1: Expected total annual wildfire loss in California census tracts, under (a) historical climate conditions; and (b) future climate conditions.

Source: Terner Center analysis of CarbonPlan and American Community Survey data.

Recent studies and policy developments offer opportunities to avoid these outcomes by reducing the physical risk to homes posed by wildfires. We organized findings from recent reports and seven expert interviews into categories below. Key reports we reviewed included: the Senate Bill (SB) 254 (2025, Becker) Natural Catastrophe Resiliency Study by the California Earthquake Authority (2026) (“CEA Resiliency Study” below); SPUR’s Shared Risk, Shared Resilience; Dave Jones’ The Uninsurable Future; and Insurance for Good’s study of California insurance discounts.^[5]

Advancing the Complementary Goals of Market Stabilization and Affordable Insurance Premiums

California legislation enacted in 2025 aims to build on the Sustainable Insurance Strategy allowing home insurance premiums to better reflect true climate risks and the rising costs of reinsurance,^[6] though some research suggests additional measures are needed. Assembly Bill (AB) 1 (Connolly, 2025) requires the California Department of Insurance (CDI) to regularly update regulations requiring insurers to offer discounts for homeowners who have invested in risk reduction.^[7] These discounts are intended to both bring premiums closer to true risks of loss and provide incentives for homeowners to reduce these risks. However, Kousky and You (2025) suggest that existing discounts have been inconsistently applied and are insufficient in magnitude.^[8] Jones (2025) proposes stronger measures to require discounts than AB 1, using Colorado’s 2025 House Bill 25-1182 as a model.^[9]

A healthy insurance market is just the first step: making sure coverage is available does not necessarily make it affordable–especially for households exposed to the greatest climate risk. A well-functioning home insurance market can accurately price risk, but that price may be out of reach for many residents without further subsidy or risk-reduction investments.^[10] Thus, measures to expand risk-reduction investments complement those to stabilize California’s home insurance markets.

AB 888 (Calderon, 2025) authorized a new grant program intended to enable more homeowners to afford home-hardening measures, including fire-safe roofs and removing vegetation near homes. This support adds to existing programs, such as the California Wildfire Mitigation Program, which is available for limited geographies. However, these programs do not yet meet the scale of need (below).

Scaling Up Local and Regional Governance for Wildfire Risk Reduction

Previous Terner Center research has emphasized that governance fragmentation is an obstacle to effective rebuilding after wildfires,^[11] and this challenge also applies to pre-disaster risk reduction. The communities facing the highest wildfire risk are often the same ones with the least organizational capacity, making technical assistance and flexible governance pathways especially important.^[12]

Coordinating wildfire prevention and risk-mitigation investments requires taking into account that  the exposure of a home to wildfires depends critically on fuel loading in the surrounding neighborhoods and region. Thus, a homeowner’s risk of having their home experience a severe wildfire is largely determined by the actions of nearby homeowners, other private landowners, and public entities.^[13]

One policy option the CEA Resiliency Study proposes is a cost-distribution framework to share the financial burden of home hardening among homeowners, insurers, and governments, rather than placing the burden solely on individual property owners. The framework references approaches for community-wide assessments to generate a centralized fund to finance large-scale, neighborhood risk reduction.^[14] Fairly allocating costs and incentivizing risk mitigation throughout neighborhoods will be important, as each household’s decision to invest in reducing fuel loading affects the likelihood that their neighbors will experience a damaging wildfire—a classic collective action problem.

Government coordination entities already exist in several California regions and use both formal and collaborative structures. The Marin Wildfire Prevention Authority, created as a Joint Powers Authority via Measure C in 2020, is an example of a formal model with clear cross-jurisdictional authority and dedicated funding. It facilitates effective coordination of vegetation management and home hardening programs across member jurisdictions by using Measure C parcel-tax revenue to fund countywide grants, inspections, defensible-space development, and fuel-reduction projects. These efforts help lower wildfire exposure in ways insurers can recognize and price into coverage decisions.^[15] The East Bay Wildfire Coalition of Governments is an example of a collaborative model that uses a Memorandum of Understanding structure to coordinate regional wildfire risk management—for example, by bringing cities, counties, and fire districts together around shared priorities like defensible space, home hardening, vegetation management, and evacuation planning.^[16]

Another avenue enabled by SB 852 (Dodd, 2022) remains largely untried: Climate Resilience Districts (CRDs). These could provide a more scalable and durable mechanism for communities seeking shared governance.^[17] Unlike a Joint Powers Authority tied to a single local tax measure, CRDs operate as independent special districts with the unique statutory power to issue bonds, levy fees, and utilize tax increment financing to sustain long-term infrastructure investments. Additional state technical assistance could lower barriers to uptake in lower-capacity jurisdictions.^[18]

State Planning for Risk-Reduction Investments

Reducing physical wildfire risk to existing housing stock at scale may require more extensive state planning and resources.^[19] A state plan could be designed to not only reduce risk but also to further equity—including by initially focusing on the most vulnerable residents at greatest risk.^[20] The households most exposed to displacement, including low-income renters and underinsured homeowners, often have the fewest resources to navigate recovery or invest in resilience.^[21] Without an explicit framework for directing investments toward these residents, resources are more likely to flow toward higher-income households and communities with greater organizational capacity.^[22] Therefore, incorporating income-based investments in a state plan would help ensure that resilience gains are broadly shared.

New funding and financing mechanisms would be needed to implement this plan at scale. AB 888 (above) represents an early step, but its funding mechanism is likely modest in size relative to the total investment needed to harden all homes in wildfire zones.^[23] Additional tools will be needed to invest in risk-reduction activities at the community and landscape scales.^[24]

Incorporating Wildfire Risk Data into Policy and Planning

SB 429 (Cortese, 2025) authorized CDI to develop a fully public catastrophe model (similar to models used by insurers to predict the likelihood and extent of catastrophic losses), in partnership with state universities. However, full development and deployment is not expected until 2029, when the university-based consortium funded to implement SB 429 completes its work.^[25] Until then, new open data sources may offer granular information for planners, policymakers, and researchers beyond conventional information sources such as Cal Fire’s Wildfire Hazard Severity Zones.

As illustrated above, CarbonPlan’s Open Climate Risk offers the first open-source, parcel-level dataset on wildfire risks to U.S. buildings.^[26] By providing quantitative estimates of risk of loss on individual parcels, the new data may allow planners to compare the costs of wildfires with other housing costs and appropriately prioritize actions to reduce risk. These data can also provide a benchmark for consumers, consumer advocates, and regulators to interpret insurance premiums incorporating private catastrophe models approved under the Sustainable Insurance Strategy.^[27]

Proprietary models used by insurance companies may represent additional physical processes; for example, CarbonPlan’s estimates do not represent any details about individual homes beyond their location, or the urban firestorm processes such as those leading to severe damage during the 2025 Eaton Fire.^[28] The State could consider procuring a subset of privately owned data or otherwise investing in options to bring insights to the public while a more comprehensive catastrophe model is under development and to provide a complement to the publicly developed model.^[29]

Additional data tools and data-sharing platforms are being developed by the WUI Data Commons and by the Insurance Institute for Business & Home Safety (IBHS). The CEA Resiliency Study calls for a statewide data commons to collect and share wildfire mitigation data across sectors, noting the example of aviation’s multi-stakeholder safety reporting systems as an established precedent for de-identified data-sharing.

Finally, California’s Fifth Climate Change Assessment synthesis reports and finalized geographic information resources are scheduled to be complete by late 2026. Through Cal-Adapt (the state’s climate data platform) and the Pyregence Consortium (a state-funded wildfire modeling research group), the Assessment will provide recently updated climate model projections in a format appropriate for local planning.^[30]

Conclusion and Future Research Opportunities

California has made meaningful progress reforming its home insurance market to address the costs of climate change. In addition, state and local governments are beginning to develop the governance frameworks needed to address wildfire risk at scale.

By leveraging newly available data sources, planners and researchers can develop targeted, equitable state and local strategies. Further research could help identify the number and geography of California homes at highest risk of loss from wildfire, as well as those most vulnerable to housing instability when these losses occur—information that could help policymakers tailor policies for these households.^[31]

The work ahead—coordinating public and private actions to reduce risk, targeting investments equitably, and strengthening the evidence base—will require sustained commitment from state and local policymakers, industry participants, and researchers alike.

Acknowledgments

We would like to thank Sarah Karlinsky, Ben Metcalf, Nam Nguyen, Michael Wara, Oriana Chegwidden, Chris Allen, and Laurie Johnson for providing comments on previous drafts. We would also like to thank Quinn Underriner for his assistance with data analysis and map presentation.

We are grateful to Wells Fargo and Sobrato Philanthropies for supporting this research.

This research does not represent the institutional views of UC Berkeley or of the Terner Center’s funders. Funders do not determine research findings or recommendations in the Terner Center’s research and policy reports.

Endnotes

^[1] Dong, et al (2025). Karlinsky, et al (2025). Munce and Devulapalli (2026). Nguyen, et al (2026).

^[2] California Wildfire & Forest Resilience Task Force (2026).

^[3] We overlaid CarbonPlan’s annual risk of loss, using the platform’s census tract-average estimates (represented at the parcel scale), with 2019-2023 five-year American Community Survey (ACS) estimates of median owner-occupied home value and multiplied by the number of owner-occupied homes in each census tract, using ACS variables B25077_001E and B25003_002E from https://api.census.gov/data/2023/acs/acs5. We compared CarbonPlan’s historical (2011) and future climates (2047 under the Representative Concentration Pathway 8.5 scenario), available from https://docs.carbonplan.org/ocr/en/latest/access-data.html#regional-statistics-downloads. Chegwidden, et al (2026).

^[4] This simple estimate assumes no further risk-reducing investments or other changes to the building stock, so it represents the increased risk due to climate change alone. This estimate includes only owner-occupied housing and totals $5 billion in annual expected wildfire losses in 2047: this falls within the range of $4 to 7 billion mean expected annual losses to residential buildings estimated by the CEA Resiliency Study (Table 2). Our estimate may also be conservative, as CarbonPlan’s methodology excludes urban firestorm processes (below). Their estimates also do not account for any details about individual buildings beyond their locations.

^[5] California Earthquake Authority (2026). Atkinson and Corrigan (2026). Jones (2025). Kousky and You (2025).

^[6] California Earthquake Authority (2026). Keys and Mulder (2024).

^[7] California Wildfire & Forest Resilience Task Force (2026).

^[8] Kousky and You (2025).

^[9] Jones (2025).

^[10] Jones (2025). California Earthquake Authority (2026). Nguyen, et al (2026).

^[11] Karlinsky, et al (2025).

^[12] Atkinson and Corrigan (2026).

^[13] Atkinson and Corrigan (2026).

^[14] California Earthquake Authority (2026).

^[15] Atkinson and Corrigan (2026).

^[16] Atkinson and Corrigan (2026).

^[17] Mullan and Citron (2026).

^[18] Atkinson and Corrigan (2026).

^[19] Some planning is underway to address landscape-scale risk reduction: https://actionplan2026.wildfiretaskforce.org/; California Earthquake Authority (2026). Wara, et al (2026).

^[20] Teixeira (2026).

^[21] Karlinsky, et al (2025).

^[22] Atkinson and Corrigan (2026).

^[23] AB 888 is funded from 40 percent of property and casualty insurance premium tax revenues above the 2023 baseline. The CEA’s estimates of the total investments needed to harden all at-risk California homes are $30 billion or more.

^[24] Atkinson and Corrigan (2026). Jones (2025).

^[25] California Earthquake Authority (2026).

^[26] Chegwidden et al (2026).

^[27] Chegwidden (2024).

^[28] See discussion of limitations in https://carbonplan.org/research/climate-risk-fire-methods. Kenny, R., et al. (2026). Urban trees and structure loss in the 2025 Eaton and Palisades fires. Urban Forestry & Urban Greening, 121, 129470. https://doi.org/10.1016/j.ufug.2026.129470.

^[29] Michael Wara, personal communication, 2026.

^[30] CDI is also contributing to a Climate Adaptation Finance and Insurance synthesis report intended to provide an evidence base for physical risk-mitigation strategies and to inform property insurance markets and policy. Governor’s Office of Land Use and Climate Innovation. (2025, March 7). Technical Advisory Council Item 8: CA Fifth Assessment Reports [Memorandum]. California Integrated Climate Adaptation and Resiliency Program. https://www.lci.ca.gov/wp-content/uploads/20250307-Item_8_5th_Assessment_Reports_Memo.pdf

^[31] For example, different policy strategies may be needed to effectively reach low-income households depending on whether they reside in owner-occupied housing, naturally occurring affordable housing (NOAH) which is often managed by small landlords, or subsidized affordable housing managed by nonprofit or public operators. Manji and Decker (2024).

References

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California Earthquake Authority. (2026). Enhancing California’s Resiliency to Natural Catastrophes: Senate Bill 254 (2025) Study Report. Accessed from https://www.cawildfirefund.com/sb-254-natural-catastrophe-resilience-study.

California Wildfire & Forest Resilience Task Force. (2026, January 27). New Laws Strengthen Home Hardening, Insurance Access, and Wildfire Risk Transparency. Accessed from https://wildfiretaskforce.org/new-laws-strengthen-home-hardening-insurance-access-and-wildfire-risk-transparency/.

Chegwidden, O. (September 2024). Comment letter to California Department of Insurance on catastrophe modeling regulation (REG-2023-00010). Accessed from https://files.carbonplan.org/California-Department-of-Insurance-Comment-Letter-09-17-2024.pdf.

Chegwidden, O., et al. (2026, February 10). Making climate risk data open. CarbonPlan. Accessed from https://carbonplan.org/research/climate-risk-explainer.

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Keys, B. J., & Mulder, P. (2024). Property Insurance and Disaster Risk: New Evidence from Mortgage Escrow Data (Working Paper No. 32579). National Bureau of Economic Research. https://doi.org/10.3386/w32579

Kousky, C., & You, X. (2025). Do California Insurers Reward Wildfire Resilience? Insurance for Good. Accessed from https://www.insuranceforgood.org/blog/do-ca-insurers-reward-wildfire-resilience.

Manji, S., & Decker, N. (2024). Ownership and Management of Small Multifamily Rental Properties. Terner Center for Housing Innovation. Accessed from https://ternercenter.berkeley.edu/research-and-policy/small-multifamily-rental-market/.

Mullan, A., & Cintron, E. (2026, April 17). Examining California’s Climate Resilience Districts. National Academy of Public Administration. Accessed from  https://napawash.org/news/examining-californias-climate-resilience-districts.

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