The Palisades Fire exposed a problem that has been building for years in California: tens of thousands of homeowners can’t buy fire insurance at any price. When flames swept through Pacific Palisades in January 2025, they destroyed not just homes but the illusion that traditional insurance could keep pace with California's escalating wildfire risk.

For homeowners in Los Angeles and across California’s fire zones, the insurance crisis is no longer theoretical. State Farm stopped writing new policies in California in 2023. Allstate followed. The California FAIR Plan, the state’s insurer of last resort, now covers more than 555,000 homes — more than four times what it covered just five years ago. And even when coverage is available, premiums have climbed 30-50% in high-risk areas.

Homeowners across all price ranges face the same fundamental problem. A home in the foothills that needs $800,000 in dwelling coverage or a property in Pacific Palisades requiring $3 million faces the same barrier: traditional insurers won't write the policy. These aren't marginal properties. They’re primary residences where families have lived for decades, retirement homes, and properties that represent lifetimes of savings. And their owners are discovering that location matters more than financial means when it comes to insurability.

Parametric insurance is emerging as the answer to what was recently considered an uninsurable problem.

The Traditional Insurance Model is Breaking

Traditional property insurance operates on an indemnity model. Insurers assess damage after a loss, send adjusters, process claims, negotiate settlements, and eventually pay out. The model worked fine until climate change started to meaningfully modify the cycles and patterns we had come to depend on. As the 75 year and 100 year events started becoming more frequent and the severity of events increased, the losses overwhelmed the system, and the indemnity model started breaking down.

Wildfire risk has broken this model in California. Fires are more frequent, more severe, and more expensive. The Camp Fire in 2018 caused $12 billion in insured losses. The 2020 fire season generated between $7 billion and $13 billion in claims. The Eaton and Palisades in 2025 caused $40 billion of insured losses and destroyed more than 16,000 structures. Each catastrophic season pushes more insurers to exit the market or raise premiums to levels that make coverage unaffordable.

Properties in fire zones face additional complications. Rebuilding after a major fire costs more due to material and labor shortages. The claims process becomes more complex when thousands of homeowners file simultaneously. Extended timelines for assessments and payments leave families in limbo for months.

How Parametric Insurance Works

Parametric insurance operates on a fundamentally different principle. Instead of paying for actual damages assessed after a lengthy claims process led by an insurance adjuster, parametric policies pay a predetermined amount when a predefined trigger occurs. The trigger is typically an objective, third-party measurement — like wind speed, earthquake magnitude, or, in the case of wildfire coverage, fire proximity.

Here’s an example: A homeowner in a fire zone buys a $750,000 parametric fire policy with a trigger based on fire perimeters published by the National Interagency Fire Center (NIFC). The policy specifies that if a NIFC fire perimeter intersects the property boundary of the insured location, the policy pays out automatically. No damage assessment. No claims adjuster. No negotiation.

The payment arrives within days, not months. The homeowner can use it immediately to secure temporary housing, hire cleanup services, or begin rebuilding. If the home survives the fire but is uninhabitable due to smoke damage, the payment still arrives because the trigger was met.

This speed and certainty is particularly valuable for homeowners who need immediate resources to maintain their families and begin recovery without waiting months for traditional claim settlements.

Covering the Gap for Californians

Parametric insurance isn’t replacing traditional coverage — it’s filling the gap where traditional coverage no longer exists or fails to provide adequate protection.

Or consider a different scenario: A homeowner can’t secure any traditional fire coverage but owns the property outright. A $1.2 million parametric policy based on fire triggers provides financial protection without requiring an underlying traditional policy.

The parametric approach also solves the speed problem. Even now, a year after the Eaton and  Palisades event, as much as 70% of the victims are still displaced. After major fires, thousands of claims overwhelm insurance companies simultaneously. Adjusters are scarce. Contractors are booked for months. Getting a claim settled can take six months or longer. Parametric payments arrive within days of the trigger event, giving homeowners immediate resources when they need them most.

This speed translates to practical advantages. Homeowners can secure contractors immediately, reserve materials before they become scarce, and begin rebuilding while neighbors are still waiting for adjusters. The financial impact of delayed rebuilding - lost rental income, extended temporary housing costs, property value deterioration - can equal or exceed the original construction costs.

Why Now?

There are a couple of factors driving the adoption of parametric fire coverage among California homeowners:

Traditional Market Failure

‍When State Farm and Allstate won’t write your policy, alternative solutions move from interesting to necessary. The Palisades Fire demonstrated that even well-maintained neighborhoods in Los Angeles aren’t immune to carrier exits.‍

Climate Risk Clarity

‍Wildfires in California are not a temporary anomaly that will revert to historical patterns. Climate change is making fire seasons longer and more intense. Homeowners and insurers both understand this is a permanent shift, not a spike in a normal cycle. This shared understanding makes parametric solutions more attractive than hoping traditional insurance will become available again.

The Future of Fire Coverage in California

For homeowners in fire zones facing an insurance desert, parametric coverage offers something traditional insurance no longer can: available, adequate protection at the coverage levels they actually need and more timely payouts, allowing lives to be rebuilt.

The Palisades Fire will not be the last major wildfire to impact Los Angeles. As California’s wildfire risk continues to climb, more homeowners will find themselves unable to secure traditional coverage. Parametric insurance is evolving from an alternative to a necessity - covering the uninsurable not through creative claims processing but by fundamentally rethinking when and how insurance pays.

For California homeowners in fire zones, the question is no longer whether to consider parametric coverage. The question is how much they need and how quickly they can secure it before the next fire season begins.