California’s fire crisis has already caused some insurers to exit the state or drastically limit their coverage.
As wildfires rage across California year after year, the consequences extend far beyond its borders. For homeowners, these fires may have significant implications, particularly when it comes to fire insurance. Arizona homeowners may soon feel the impact across state lines as legislators and insurance regulators respond to growing challenges in managing fire risk and providing coverage.
Wildfire-related insurance claims in California – totaling billions annually – have prompted a scramble. When insurers experience substantial losses, they typically respond in one or more ways: increasing premiums, tightening underwriting standards or withdrawing coverage altogether in high-risk areas. California’s fire crisis has already caused some insurers to exit the state or drastically limit their coverage. This exodus forces remaining companies to absorb more risk, potentially driving up costs for all policyholders, including those in neighboring Arizona. As insurers grapple with massive losses, they often reassess their risk models for states like Arizona, where wildfire risks are also present. The dry climate, high temperatures and increasing development near wildfire-prone areas make it a key state for insurers to monitor.
In Arizona, the most immediate impact may be higher fire insurance premiums. Even for homeowners in areas not directly threatened by wildfires, insurers could implement statewide rate increases to offset their California losses. Additionally, stricter coverage requirements may emerge. Arizona homeowners might be required to take additional fire-mitigation measures, such as clearing vegetation around their properties or installing fire-resistant materials, to qualify for coverage. There’s also the risk of a reduced insurance market. If insurers decide that Arizona’s fire risk is too great – intensified by California’s losses – they could limit policy options in high-risk areas. This could leave some homeowners struggling to find affordable or comprehensive fire insurance.
The real estate market has already felt the impact of this situation in the previous months, only to be exacerbated by the most recent conditions in California. Realtors and real estate professionals in the Quad Cities area and across Northern Arizona have expressed the difficulties they have faced when it comes to homebuyers being able to find coverage. There are still local insurance providers that have been able to assist homebuyers, but premiums are higher and coverage can be increasingly difficult to come by.
With many buyers coming from California, they often have a property there that needs to sell before moving. Sales have started to fall through for buyers, as their purchases are contingent on selling a property in California for which the buyers there can’t get coverage on. For now, most buyers in this area are able to get coverage at the time of purchase, but that could be a different conversation when it comes to renewal or new policies later down the line.
Fire-insurance insecurity will continue to play a role in our communities as insurers make adjustments in response to recent circumstances in the neighboring state of California. In 2025, legislators and real estate professionals alike will play key roles in both protecting and educating consumers when it comes to fire-insurance coverage. In the meantime, it is crucial for homeowners to understand the importance of being prepared and taking their own measures to protect their homes in an environment prone to wildfires. Make sure to follow Firewise guidelines to make your home and surrounding areas less susceptible to fire and have a plan in the case of an emergency. A realtor can provide resources and guidance not only when you want to purchase a home, but in protecting the one you already own and love. QCBN
By Kayla Stazenski
Kayla Stazenski is a local REALTOR at Better Homes and Gardens Bloomtree Realty. She is the 2025 President of the Prescott Area Association of REALTORS (PAAR). For additional information or to contact PAAR, visit www.paar.org.
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