The Los Angeles wildfires, causing massive devastation, are set to become the fourth most expensive natural disaster in over a century. Preliminary estimates put the insured losses at around $45 billion, making it the most expensive wildfire in history.
Costliest wildfire in history
The LA wildfires have surpassed the previous record set by the 2018 Camp Fire in Northern California, which had insured losses of $12.2 billion. The estimated losses from the current wildfire are nearly 3.6 times higher.
CoreLogic, a risk modeling and catastrophe data firm, projects total losses exceeding $200 billion, with an uninsured gap of 78%. Their estimates cover fire and smoke damage, increased labour and building materials costs, debris removal, cleanup, and temporary housing.
“Many affected properties are high-value homes, so moderate fire or smoke damage could lead to substantial claims,” said Tom Larsen, Senior Director at CoreLogic.
Impact on insurance industry
At least a dozen major insurers covering 80% of California’s market are withdrawing or restricting new policies, intensifying the state’s insurance crisis. Michael Wara, a climate and energy expert at Stanford University, warned that the wildfire losses could destabilise the insurance market.
State Farm cancelled 1,600 policies in July 2024, pushing more homeowners toward the state-backed FAIR Plan for those who cannot secure traditional insurance. By 2024, nearly 1,400 homes in fire-affected Pacific Palisades were covered under the FAIR Plan—four times the amount in 2020.
The FAIR Plan has a payout cap of $3 million per residential policyholder, leaving a significant portion of losses uninsured.
A National Bureau of Economic Research (NBER) study found that climate-related disaster risks are driving up home insurance premiums. Between 2020 and 2023, counties with high risks saw a 22% increase in premiums, compared to the national average of 13%.
The study by researchers Benjamin J. Keys and Philip Mulder forecasts homeowners in high-risk areas could see an additional $700 increase in annual premiums by 2053. Lower-income communities will be hit hardest, as rising costs make insurance unaffordable.
As extreme weather events become more frequent and severe, the growing insurance crisis highlights the urgent need for climate resilience and financial solutions to protect homeowners and businesses.
Top 10 Costliest Wildfires
| Rank | Month/Year | Country/Region | Event | Insured Loss ($ Billion) |
|---|---|---|---|---|
| 1 | January, 2025 | US | LA Wildfires | $45.00 |
| 2 | November, 2018 | US | Camp Fire | $12.20 |
| 3 | October, 2017 | US | Tubbs Fire | $10.90 |
| 4 | November, 2018 | US | Woolsey Fire | $5.10 |
| 5 | October, 1991 | US | Oakland (Tunnel) Fire | $3.80 |
| 6 | October, 2017 | US | Atlas Fire | $3.70 |
| 7 | May, 2016 | Canada | Horse Creek Fire | $3.70 |
| 8 | August, 2023 | US | Maui/Hawaii Fire | $3.50 |
| 9 | Sep-Oct, 2020 | US | Glass Fire | $3.50 |
| 10 | Aug-Sep, 2020 | US | CZU Lightning Complex Fire | $3.00 |
Top 10 costliest natural disasters (Adjusted for 2023 Dollars)
| Rank | Month/Year | Country/Region | Event | Insured Loss ($ Billion) |
| 1 | August, 2005 | US | Hurricane Katrina | $102.00 |
| 2 | September, 2022 | US, Cuba | Hurricane Ian | $56.00 |
| 3 | March, 2011 | Japan | 2011 Tohoku Earthquake/Tsunami | $48.00 |
| 4 | January, 2025 | US | LA Wildfires | $45.00 (preliminary) |
| 5 | September, 2017 | US, Caribbean | Hurricane Irma | $42.00 |
| 6 | Aug-Sep, 2021 | US, Caribbean | Hurricane Ida | $41.00 |
| 7 | October, 2012 | US | Hurricane Sandy | $40.00 |
| 8 | August, 2017 | US | Hurricane Harvey | $38.00 |
| 9 | September, 2017 | US, Caribbean | Hurricane Maria | $37.00 |
| 10 | August, 1992 | US, Bahamas | Hurricane Andrew | $35.00 |
The January 2025 Los Angeles wildfires are set to be one of the costliest natural disasters in modern history, adding to the financial and environmental challenges of climate change.
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