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California’s homeowners insurance industry faces rough road ahead as wildfires continue

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The wildfires in California have led to an unprecedented insurance crisis.  (iStock )

The California wildfires have brought widespread disaster to communities in Southern California. It’s also contributed to a serious insurance crisis happening in the state. Many insurers have pulled out of the state or have paused coverage.

AIG left the state in 2022, while Chubb and Allstate limited their coverage options in the last few years. An even larger blow, State Farm pulled their 72,000 policies in 2024.

“It often takes [admitted carriers] a long time to adjust, so their only options are to try to turn things around or gradually pull out, which is where the E&S market steps in,” Christopher Hatt, managing director of Lloyd’s facilities and US personal lines at Novatae Risk Group said.

California’s FAIR Plan, a last-resort insurer, faces uncertainty as well, adding to the significant insurance challenges the state is currently facing. The FAIR Plan distributes losses among the state’s insurers, based on market share.

The claims expected to come due to the wildfires are simply beyond insurers’ capacity. Property and casualty companies are expected to pay billions of dollars in claims due to the damage done by the wildfires.

Back in 2018, the Camp Fire cost $10 billion, the Woolsey Fire caused $4.2 billion in back. The Los Angeles fires will likely cost more than both fires, coming in as one of the most expensive wildfires to date.

If you need a new insurer, head to Credible to get a better understanding of the different types of home insurance coverage available to you. You can get quotes for free from Credible’s partners.

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Homeowners insurance costs expected to rise in and out of wildfire-prone areas

Homeowners insurance across the country is still rising, and 2025 isn’t expected to be any better for homeowners. Premiums may climb by as much as 15%, on average, with states like California seeing even higher hikes due to more frequent natural disasters plaguing the area.

Insurers are passing their significant losses off to homeowners. In the first half of 2024, insurer losses hit $62 billion. Losses are expected to be even greater this year, which means higher premiums for homeowners as insurers attempt to recover.

Specialty insurance, like wind and flood insurance, is expected to be even more expensive in the coming year. Rate hikes of 20% or more are predicted due to updated FEMA flood maps and a significant rise in natural disasters.

Homeowners are concerned about what these rate hikes will mean for their bottom lines. With housing prices still up and homeowners insurance costs due to rise, the housing market is growing more and more expensive. Two-in-three insured homeowners blame weather-related events for their increased insurance premiums, according to Fannie Mae.

In an attempt to address the insurance crisis, California Insurance Commissioner, Ricardo Lara, has announced his Sustainable Insurance Strategy. This regulation aims to stabilize the insurance market in California while simultaneously addressing the growing risks of wildfires. Under the plan, insurance providers would increase coverage in high-risk areas, ensuring all Californians get the insurance they need.

“Californians deserve a reliable insurance market that doesn’t retreat from communities most vulnerable to wildfires and climate change,” said Commissioner Lara. “This is a historic moment for California. My Sustainable Insurance Strategy is focused on addressing the challenges we face today and building a resilient insurance market for the future. With input from thousands of residents throughout California, this reform balances protecting consumers with the need to strengthen our market against climate risks.”

Lara’s plans have been met with some criticism, however. Consumer Watchdog, a California-based advocacy group, has pointed out that these new rules will likely mean substantial rate hikes, up to 50%.

Having enough insurance is vital. Having the appropriate insurance coverage is just as important. To ensure your insurance is suitable for your circumstances, visit Credible to check out plans, providers and costs.

80% OF AMERICANS ARE DEALING WITH A COST OF LIVING CREEP

Relief options for those impacted by the California wildfires

There are a variety of relief options for anyone who has been impacted by the wildfires in California. Freddie Mac and Fannie Mae have forbearance programs that give homeowners mortgage relief up to 12 months without incurring late fees or penalties.

“The number one priority for those affected by the destruction of these ongoing wildfires is to reach safety,” Mike Reynolds, Freddie Mac’s single-family vice president and head of servicing, said. “Once out of harm’s way, we encourage homeowners in these affected areas to contact their mortgage servicer to learn about relief options. Freddie Mac and our partners stand ready to provide immediate assistance and aid in the recovery of families and individuals.”

Freddie Mac and Fannie Mae relief options are available to any homeowner with Freddie Mac or Fannie Mae mortgages who have been impacted by an eligible disaster. Foreclosures and other legal proceedings are also subject to a 12-month forbearance.

Other federal funding is also available now that President Biden has issued a major disaster declaration in California. There’s a 90-day moratorium on foreclosures insured by the Federal Housing Administration (FHA).

Anyone who had their home destroyed in the fires may qualify for HUD’s section 203(h) program that provides FHA insurance to disaster victims. HUD housing counselors are also available to assist anyone impacted. Find a HUD-approved housing counseling agency online or use our telephone look-up tool by calling (800) 569-4287.

Comparing multiple insurance quotes can potentially save you hundreds of dollars per year. And, it’s so easy to get a free quote in minutes through Credible’s partners here.

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Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

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Buffett denies social media rumors after Trump shares wild claim that investor backs president crashing market

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Berkshire Hathaway responds to 'false reports' on social media

Warren Buffett went on the record Friday to deny social media posts after President Donald Trump shared on Truth Social a fan video that claimed the president is tanking the stock market on purpose with the endorsement of the legendary investor.

Trump on Friday shared an outlandish social media video that defends his recent policy decisions by arguing he is deliberately taking down the market as a strategic play to force lower interest and mortgage rates.

“Trump is crashing the stock market by 20% this month, but he’s doing it on purpose,” alleged the video, which Trump posted on his Truth Social account.

The video’s narrator then falsely states, “And this is why Warren Buffett just said, ‘Trump is making the best economic moves he’s seen in over 50 years.'”

The president shared a link to an X post from the account @AmericaPapaBear, a self-described “Trumper to the end.” The X post itself appears to be a repost of a weeks-old TikTok video from user @wnnsa11. The video has been shared more than 2,000 times on Truth Social and nearly 10,000 times on X.

Buffett, 94, didn’t single out any specific posts, but his conglomerate Berkshire Hathaway outright rejected all comments claimed to be made by him.

“There are reports currently circulating on social media (including Twitter, Facebook and Tik Tok) regarding comments allegedly made by Warren E. Buffett. All such reports are false,” the company said in a statement Friday.

CNBC’s Becky Quick spoke to Buffett Friday about this statement and he said he wanted to knock down misinformation in an age where false rumors can be blasted around instantaneously. Buffett told Quick that he won’t make any commentary related to the markets, the economy or tariffs between now and Berkshire’s annual meeting on May 3.

‘A tax on goods’

While Buffett hasn’t spoken about this week’s imposition of sweeping tariffs from the Trump administration, his view on such things has pretty much always been negative. Just in March, the Berkshire CEO and chairman called tariffs “an act of war, to some degree.”

“Over time, they are a tax on goods. I mean, the tooth fairy doesn’t pay ’em!” Buffett said in the news interview with a laugh. “And then what? You always have to ask that question in economics. You always say, ‘And then what?'”

During Trump’s first term, Buffett opined at length in 2018 and 2019 about the trade conflicts that erupted, warning that the Republican’s aggressive moves could cause negative consequences globally.

“If we actually have a trade war, it will be bad for the whole world … everything intersects in the world,” Buffett said in a CNBC interview in 2019. “A world that adjusts to something very close to free trade … more people will live better than in a world with significant tariffs and shifting tariffs over time.”

Buffett has been in a defensive mode over the past year as he rapidly dumped stocks and raised a record amount of cash exceeding $300 billion. His conglomerate has a big U.S. focus and has large businesses in insurance, railroads, manufacturing, energy and retail.

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Stocks making the biggest moves midday: PLTR, CAT, AAPL JPM

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Powell sees tariffs raising inflation and says Fed will wait before further rate moves

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US Federal Reserve Chair Jerome Powell holds a press conference after the Monetary Policy Committee meeting, at the Federal Reserve in Washington, DC on March 19, 2025. 

Roberto Schmidt | Afp | Getty Images

Federal Reserve Chair Jerome Powell said Friday that he expects President Donald Trump’s tariffs to raise inflation and lower growth, and indicated that the central bank won’t move on interest rates until it gets a clearer picture on the ultimate impacts.

In a speech delivered before business journalists in Arlington, Va., Powell said the Fed faces a “highly uncertain outlook” because of the new reciprocal levies the president announced Wednesday.

Though he said the economy currently looks strong, he stressed the threat that tariffs pose and indicated that the Fed will be focused on keeping inflation in check.

“Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem,” Powell said in prepared remarks. “We are well positioned to wait for greater clarity before considering any adjustments to our policy stance. It is too soon to say what will be the appropriate path for monetary policy.”

The remarks came shortly after Trump called on Powell to “stop playing politics” and cut interest rates because inflation is down.

There’s been a torrent of selling on Wall Street following the Trump announcement of 10% across-the-board tariffs, along with a menu of reciprocal charges that are much higher for many key trading partners.

Powell noted that the announced tariffs were “significantly larger than expected.”

“The same is likely to be true of the economic effects, which will include higher inflation and slower growth,” he said. “The size and duration of these effects remain uncertain.”

Focused on inflation

While Powell was circumspect about how the Fed will react to the changes, markets are pricing in an aggressive set of interest rate cuts starting in June, with a rising likelihood that the central bank will slice at least a full percentage point off its key borrowing rate by the end of the year, according to CME Group data.

However, the Fed is charged with keeping inflation anchored with full employment.

Powell stressed that meeting the inflation side of its mandate will require keeping inflation expectations in check, something that might not be easy to do with Trump lobbing tariffs at U.S. trading partners, some of whom already have announced retaliatory measures.

A greater focus on inflation also would be likely to deter the Fed from easing policy until it assesses what longer-term impact tariffs will have on prices. Typically, policymakers view tariffs as just a temporary rise in prices and not a fundamental inflation driver, but the broad nature of Trump’s move could change that perspective.

“While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent,” Powell said. “Avoiding that outcome would depend on keeping longer-term inflation expectations well anchored, on the size of the effects, and on how long it takes for them to pass through fully to prices.”

Core inflation ran at a 2.8% annual rate in February, part of a general moderating pattern that is nonetheless still well above the Fed’s 2% target.

In spite of the elevated anxiety over tariffs, Powell said the economy for now “is still in a good place,” with a solid labor market. However, he mentioned recent consumer surveys showing rising concerns about inflation and dimming expectations for future growth, pointing out that longer-term inflation expectations are still in line with the Fed’s objectives.

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