Wildfires Trigger Insurance Claims Surge, Coverage Gaps Across US, Canada

The January 2025 wildfires in California have left many homeowners facing prolonged recovery challenges, including continuing mortgage payments and the risk of paying rent for temporary housing after insurance coverage runs out. A report by the Department of Angels found that 60% of displaced residents from the Eaton and Palisades fires will exhaust their temporary housing insurance within a year, while 77% expect rebuilding to take two years or more. Moody’s highlights that insured losses are estimated between $30 billion and $40 billion, with total economic losses potentially exceeding $250 billion, and notes that casualty insurers face additional liabilities from utility-related ignition claims and emergency response failures. Meanwhile, insurance premiums nationwide, particularly in wildfire-prone Western states, are rising faster than inflation, burdening households with higher costs and causing some insurers to withdraw coverage, pushing homeowners toward less comprehensive state plans. Industry experts emphasize the need for improved wildfire resilience in homes and communities to help mitigate risk and maintain insurance availability and affordability. In Canada, wildfire seasons have also led to increased insurance claims and restrictions on coverage additions during active fires, underscoring the importance of preparedness and adequate insurance coverage for those living in fire-prone areas.