Stars Confronting Soaring Insurance Costs in Wake of Los Angeles Fires
LOS ANGELES, CA – Affluent Los Angeles residents are facing crippling insurance premiums and coverage limitations following recent wildfires, prompting some to consider leaving California altogether, according to financial advisors and insurance experts. The escalating costs are impacting the ability of homeowners to upgrade properties, and even leaving some unable to secure adequate coverage at any price.
Steves Rodriguez of Freemark Financial advises that those seeking high-end housing with lower insurance rates explore flatter areas like Santa Monica and hancock Park,the historic neighborhood south of Hollywood predating Beverly Hills. “Your insurance is probably going to be half, if not less,” he stated.
The financial strain is forcing a reevaluation of long-held real estate strategies. Adam Yorkshire of Yorkshire Management Group notes that his Los Angeles clients historically upgraded homes every four to five years,a practice now largely untenable due to insurance costs. This is driving interest in states with no income tax, such as Florida, Nevada, tennessee, Texas, and Wyoming. though, Yorkshire reports that some return, acknowledging the overall expense of living in Los Angeles. “and a lot of people go out there and look, and sometimes they move, and sometimes they come back and say, ‘I understand why L.A. is so expensive.'”
Homeowners in high-fire-risk areas are increasingly finding traditional insurance unavailable. While California’s FAIR Plan offers coverage, it is capped at $3 million. Alternatively, “non-admitted” insurance carriers provide flexibility but lack the state-backed guarantee of payouts in the event of company insolvency following a major disaster, unlike established carriers like State Farm or Allstate.
Concerns extend even to the FAIR Plan’s reliability. mark Tinglof of Shephard tinglof + Associates is currently pursuing litigation against the FAIR Plan on behalf of a client denied coverage for smoke damage, requiring a $500,000 to $600,000 out-of-pocket expense for remediation. “But my client’s in a fortunate position as he has a lot of money,” Tinglof explained.
Beyond financial losses,residents are grappling with the destruction of community. David Lloyd of Gelfand, Rennert & Feldman represents a client who moved to the Palisades a year and a half ago, whose home sustained smoke damage but survived the fires. Lloyd emphasizes the broader impact: “She and her husband moved there for the community. They have to make the very challenging choice about how they’re going to live for the next couple of years, let alone after that, because the community that they moved to the Palisades for doesn’t exist.”