Jan 9 – Rising Insurance Costs Loom for Pacific Palisades After Devastating Wildfires

The Pacific Palisades neighborhood in Los Angeles, known for its multimillion-dollar mansions and celebrity residents, has long been one of the most exclusive areas in the U.S. Despite its luxury status, homeowners in the area have historically enjoyed some of the most affordable insurance premiums in the country, according to a Reuters analysis of insurance and real estate data.

However, this may soon change. The recent wildfires wreaking havoc across Los Angeles, coupled with regulatory changes introduced late last year, could drive up insurance costs significantly for neighborhoods like the Palisades that face heightened wildfire risks. Industry experts have warned that the scale of anticipated losses from these fires is likely to end the era of relatively low insurance rates in such vulnerable areas.

“California’s high-risk markets, like the Palisades, have historically seen relatively low insurance premiums, but that trend might be shifting,” said Philip Mulder, a University of Wisconsin professor specializing in the insurance industry.

A Reuters analysis reveals that, relative to home values, insurance costs in the Palisades are lower than in 97% of U.S. postal codes. The findings are based on a national database of price data compiled by Mulder and Benjamin Keys, a professor at the University of Pennsylvania’s Wharton School, alongside home-value estimates provided by real estate firm Zillow.