Home Insurance in High Wildfire Risk States

The 6 states with the most documented wildfire market strain

1. California
2. Colorado
3. Oregon
4. New Mexico
5. Montana
6. Washington

This list comes from Headwaters Economics' independent state-comparison analysis, not a single insurer's own reporting. California is the most heavily documented case: several major national insurers, including State Farm, Nationwide Private Client, Travelers, USAA, Allstate, Farmers, and AIG, have discontinued existing policies or paused new homeowners business there since 2021, well-reported, named actions rather than an aggregate statistic.

What the risk actually costs, and how fast it is growing

According to a 2026 U.S. Government Accountability Office report, homes in severe or extreme wildfire-risk areas paid about 8% more nationally than homes in major-risk areas, a gap that is actively widening rather than holding steady: severe/extreme-risk ZIP codes have seen premiums rise 6% to 10% every year since 2021, compared to just 1% to 4% annually in major-risk areas.

That is a meaningfully faster rate of increase specifically tied to the highest risk tier, not a broad, evenly-distributed trend.

Homes in these areas also commonly carry a separate wildfire-specific percentage deductible, typically 1% to 5% of the dwelling coverage amount, on top of a standard flat-dollar deductible for other damage types, worth checking for specifically rather than assuming your policy only has one deductible.

To estimate your own cost in a wildfire-risk area, the wildfire insurance availability and cost estimator runs this data against your own state and risk tier.

California specifically: the most extreme documented case

California alone has about 1,279,214 homes in CoreLogic-identified "extreme" wildfire-risk areas, per the Insurance Information Institute, far more than any other state in this data. This is part of why California anchors so much of the national reporting on this issue, the sheer number of homes at extreme risk there makes the state's market strain both the most visible and the most thoroughly documented case in the country, though it is not the only state experiencing this pressure.

If standard coverage is not available at all

Every one of these market-constrained states maintains a FAIR Plan, a state-mandated insurer of last resort specifically for properties that cannot get standard-market coverage. FAIR Plan premiums typically run 2 to 3 times a comparable standard policy and often cover a narrower set of perils, frequently requiring a separate difference-in-conditions policy to fill in gaps like liability or theft coverage that a standard homeowners policy would normally include. It is a real, if more expensive and more limited, fallback, not a dead end.