Are wildfires making the future uninsurable?

SPEAKER_1 (0:01)

This is Planet Money, from NPR.

Alexi Horowitz-Ghazi (0:06)

A few months back, I went to visit a woman named Heidi Lang, who lives in a small town in the forested hill country of Northern California. I met up with her at the home she built there herself.

Heidi Lang (0:16)

It's canning season, so my house is consumed by pickled jalapenos, cowboy candy, pepper jelly, and I think that was it yesterday.

Alexi Horowitz-Ghazi (0:25)

It's this cute little one-story ranch house. In the backyard, she's planted persimmon and pomegranate trees. She's got a rowdy little flock of chickens running around. Is that a silky?

Heidi Lang (0:35)

No, that is a feather foot.

Alexi Horowitz-Ghazi (0:38)

Aptly named.

Heidi Lang (0:39)

Yes.

Alexi Horowitz-Ghazi (0:41)

It's kind of like Heidi's personal slice of paradise.

And like many Americans, her home is also the most valuable thing she owns, the store of decades worth of wages and work. So naturally, she's never thought twice about having insurance on the place until a few years ago, when she got a letter from her insurance company in the mailbox. She takes it inside, opens it up, and printed right at the top.

Heidi Lang (1:05)

It's just this daunting thing. It says, Notice of Cancellation.

Alexi Horowitz-Ghazi (1:09)

Her insurance company, Farmers, which had covered her home for almost a decade and a half, was dropping her, canceling her policy.

Which is a scary prospect. Heidi's community is located in what wildfire experts consider a high-risk area, butting right up against the highly combustible wilderness. So she goes to her local insurance agent to figure out what's going on.

Heidi Lang (1:30)

And I was probably a little snappy with my agent, like, I'm being canceled? What is this?

Alexi Horowitz-Ghazi (1:36)

The agent looks it up and tells her the company had apparently taken some aerial images of her home lot and had identified piles of what they called scattered debris near her house, which could present a fire hazard.

Heidi Lang (1:48)

And I was like, what? I mean, scattered debris? What are you talking about? This is ridiculous.

Alexi Horowitz-Ghazi (1:56)

When Heidi saw the photos in question, she recognized almost immediately what they'd picked up. These were piles of wood chips she'd ordered for landscaping. But that had been all the way back in 2019 or so.

Heidi Lang (2:08)

I was like, that mulch pile has been gone for years. This is not a current photo of my house. And I was like, let's go to my house. I'll show it to you right now.

Alexi Horowitz-Ghazi (2:18)

Heidi explained to her agent that she'd actually gone great lengths to build her home with wildfire safety in mind. So she and her agent put together a little packet of evidence in order to appeal farmer's decision. And it does take a couple of weeks, but when they get back to her, Heidi learns that her appeal was in fact successful. She's gonna get to keep her insurance.

Heidi Lang (2:38)

Okay, that's great news.

Alexi Horowitz-Ghazi (2:39)

But then not too long after that, Heidi gets a second notice from farmers. It says the annual cost of her home insurance, premiums, were about to go way up. For over a decade, she'd been paying around $1,000 a year, but next year, it was gonna be nearly $10,000.

Heidi Lang (2:57)

I think I was in shock.

I never would have even entertained not having insurance before. You just have homeowners' insurance, that's what you do. But that type of an increase is just catastrophic. There's no way I could have come up with that.

Alexi Horowitz-Ghazi (3:13)

Heidi quickly realizes she is by no means alone in this. She hears that people all across her town are also getting kicked off their insurance, or getting priced out by these massive spiking premiums. And she eventually learns that what's happening in the insurance market is much bigger even than just Heidi's town. It's part of a story playing out all across the West and beyond, because the growing number and scale of climate catastrophes is changing the basic math of the insurance industry. Increasing the rates nationally for everyone, and raising the question of whether some places may become too expensive to exist.

Hello, and welcome to Planet Money. I'm Alexi Horowitz-Ghazi. You can think of the story of Heidi Lange in her town kind of like a warning from our collective future. A story that explains the collapse of the insurance industry in the face of accelerating climate disaster and what everyday people are doing to try to survive.

Today on the show, how communities in some of the most fire-prone places in the country are trying to conjure the private insurance market back into existence, what actually happens when a mega fire comes knocking at your door, and what all this means for the biggest question. In the age of climate change, will the future simply become uninsurable?