The wildfires that have killed at least 24 people and destroyed thousands of buildings in Los Angeles County are likely to be one of the costliest natural disasters ever in the US and potentially the costliest wildfires in US history, according to estimates. AccuWeather has issued a preliminary estimate of $135 billion to $150 billion in damage and economic losses from the fires, while multiple estimates put insured losses at $20 billion or higher. Evercore ISI says the wildfires likely will be treated as a single event, potentially helping trigger reinsurance coverage for primary insurers.

The California Department of Insurance has imposed a yearlong moratorium on the cancellation or nonrenewal of homeowners insurance policies in areas within the perimeter of the Palisades Fire and Eaton Fire and in certain adjoining ZIP codes. Meanwhile, APCIA President and CEO David Sampson responded to statements by Vice President Kamala Harris regarding insurance and the wildfires. "It is false, wrong and dangerous to even insinuate that insurers are abandoning their customers," Sampson said, adding, "Insurers are committed to protecting the safety of those affected and providing expedited relief to their policyholders for the covered losses."

Investigators are looking at a wide range of potential ignition sources for the devastating wildfires in the Los Angeles area. The origin of the fire in Pacific Palisades has been traced to an area behind a home on Piedra Morada Drive, while lightning has been ruled out as a cause for the Palisades Fire and the Eaton Fire, in east Los Angeles County. Insurers sent notices Southern California Edison to preserve evidence with regard to the Eaton Fire, although the utility said no fire agencies have linked it to the blaze.

The regulatory overhaul aimed at stabilizing California's insurance market is unlikely to be "an overnight fix," APCIA's Denni Ritter said, adding, "I don't want to undercut the fact that they've done a ton of work in 2024, and really, regulations take a long time to do." The wildfires currently burning in Los Angeles County are taking a major toll well before insurers are able to see the impact of the overhaul measures. One of the fires has devastated the Los Angeles neighborhood of Pacific Palisades, which experts identified five years ago as one of three areas of California especially vulnerable to wildfire losses.

Homeowners policies are "generally going to cover the cost of additional living expenses while you are out of your home, to maintain what is kind of your usual standard of living," APCIA's Karen Collins said. Such coverage is a key issue as people displaced by the Southern California wildfires determine whether to rebuild or move elsewhere. Providing an example, Collins said a policy that provides property coverage of $100,000 might cover 20% of that amount in additional living expenses.

Federal flood maps have created a "safe development paradox" that encourages development in vulnerable areas just outside designated flood zones, according to a study by North Carolina State University researchers. The study found that up to 24% of all development in 2,300 counties occurs within 820 feet of the 100-year flood zone boundary, a trend expected to persist through 2060 unless policy changes occur. This issue is highlighted by hurricanes such as Helene and Florence, which caused significant flooding in areas designated as having minimal flood risk.

A study by the University of Colorado at Boulder and the University of Wisconsin-Madison of about 5,000 homeowners who filed claims after Colorado's 2021 Marshall Fire found that nearly three-fourths were underinsured. Among that group of homeowners, over one-third were severely underinsured, defined as having coverage for less than 75% of their residence's replacement cost, the study found. Underinsured homeowners are 25% less likely to seek to rebuild within a year, according to the study.