The 2025 wildfires that were seen in and around the greater Los Angeles area were unlike other natural disasters. Some areas were literally wiped off the map. And some structures, even in the midst of the carnage, miraculously survived.

Tactical Bulls has not provided any coverage or estimates on the true costs of these wildfires. The reason — all of the initial estimates seemed too low when they were first coming out. And now we know why.

The damage may be even more costly than the worst initial estimates. It’s not just the cost of homes. There are deaths and injuries. There are cars. There are businesses, and there are valuable contents and belongings. And there was the insult on top of injury as opportunistic thieves stole what they could steal.

CALIFORNIA SPREADING

California is a unique market, with unique housing prices and unique insurance regulations. This was noted that it is a national problem. The reason is that the rest of the country, particularly anywhere with fire risks, is going to have to pay higher premiums if their homeowners insurance carrier was exposed to this catastrophe in California.

Again, this will be a national problem. This will include renters on top of homeowners.

PROJECTED TOTAL COSTS

Back in January, Moody’s had projected that insured property losses were as much as $30 billion from the fires. And according to ClaimsJournal.com, catastrophe modeler KCC said the figure would be close to $28 billion. And another figure from ClaimsJournal.com said it would be “Tens of thousands of properties… dozens of fatalities… $8 billion for the two largest fires to $40 billion for all of five… with hundreds of billions of losses in total economic losses…”

AccuWeather’s preliminary estimate of total damage and economic loss was initially $52 billion to $57 billion. That was in January, and it warned that the risks were not even over at that time.

A more recent report was issued by Fidelis Insurance Holdings Limited. While it was reporting about its Aviation and Aerospace line of business, the company’s preliminary estimate of catastrophe losses related to the January 2025 California wildfires was signaling an insured industry loss estimate of $40 billion to $50 billion — with its own exposure at $160 million to $190 million in catastrophe loss estimates.

Chubb Ltd. was in the first batch of companies reporting losses from the L.A. area fires with a $1.5 billion expected payout of its own.

Insurer State Farm, which has already stopped taking some new policies and exited others, has also already warned that it may have to exit the California market entirely if state regulators will not allow it to raise their rates (it has requested a 22% rate hike in previous weeks).

The California FAIR Plan’s own stats and data show its exposure rose by well over 100% in a single year. It counts in-force policies as having jumped from about 320,000 to over 450,000.

THE NATIONAL PROBLEM

Forbes Advisor published its 2025 homeowners insurance outlook in November-2024, calling for home insurance rates of 20% higher already seen in Arizona, Texas and Utah — with many experts seeing that trend to continue for the foreseeable future. Labor and materials costs rose from inflation, and the higher number of natural disasters is only making a difficult situation even worse.

This view was even before the L.A. fires. And to make matters even worse if catastrophe doe strike, may homeowners do not understand what their insurance really is and may be underinsured:

According to LexisNexis’ 2024 Home Insurance Consumer Insights report, only about half of homeowners know the specifics of their policies, and many could be underinsured. Seventy percent of homeowners rely on their insurance company to ensure they have sufficient coverage.

Now imagine what happens when insurance companies decide to exit certain geographies entirely or by being selective about which properties they are willing to insure. On top of the insurers who do remain, they will have to charge higher premiums to offset those risks in those geographies.