January 2026 marks one year since the devastating Eaton and Palisades fires swept through Los Angeles County, destroying more than 16,000 structures and leaving behind what insurers call the most expensive wildfires in global history. But for the tens of thousands of families displaced by the disaster, the anniversary brings little to celebrate.

According to a new survey by Department of Angels, seven in ten fire survivors have yet to return home. For many, the path back remains blocked not by physical destruction, but by bureaucratic obstacles, insurance disputes, and a perfect storm of economic headwinds that have turned recovery into a years-long ordeal.

The Human Toll

The survey's findings paint a picture of communities still in crisis:

  • 70% of survivors remain unable to return to their homes
  • 40% of policyholders have experienced insurability issues, including massive premium increases or dropped coverage
  • Half of respondents have depleted much or all of their savings
  • About 50% report concerns about their mental health

"The toll on residents has grown as recovery dragged on. We're seeing families who did everything right—maintained insurance, paid their premiums, followed the rules—and they're still living in limbo a year later."

— Department of Angels spokesperson

The Insurance Battlefield

Insurers have paid more than $22.4 billion on tens of thousands of claims from the Los Angeles wildfires, according to the California Department of Insurance. But survivors say that money often hasn't covered their actual losses, and the process of obtaining payment has been agonizing.

Common complaints include:

  • Lengthy delays in claim processing and payment
  • Disputes over rebuilding cost estimates
  • Coverage gaps for additional living expenses during prolonged displacement
  • Difficulty obtaining replacement coverage after policies are not renewed

State law mandates a one-year moratorium on insurers canceling or not renewing customers' policies after a state of emergency declaration. But that protection is now expiring for many fire survivors, who face either sharply higher premiums or the prospect of having no coverage at all.

The Financial Damage

The fires rank as the most expensive wildfires ever globally, with $40 billion in insured losses according to Swiss Re Institute. But total economic damage extends far beyond insurance claims:

  • $131 billion: UCLA estimate for total property and economic losses
  • $250 billion: Moody's estimate including longer-term latent damages
  • $34 billion: Amount Governor Gavin Newsom says the federal government owes California in disaster relief

State Farm General Insurance Company alone incurred $7.6 billion in catastrophe losses and remains in what analysts describe as a relatively weak financial position. California's FAIR Plan—the insurer of last resort—received a $1 billion emergency payment from the insurance industry after running out of funds to cover approximately $4 billion in claims.

Rebuilding Obstacles Mount

Even for those who have received insurance settlements, rebuilding remains daunting. Fewer than one-fifth of burned-out homes in Altadena have been issued rebuilding permits, let alone started construction.

Several factors are slowing reconstruction:

Labor shortages: Immigration enforcement has reduced the labor pool for California's construction industry, with many undocumented workers who traditionally fill construction jobs avoiding the state.

Tariff impacts: Trump administration tariffs on lumber and cabinets are expected to raise homebuilding costs by 5-10%, according to industry estimates.

Material backlogs: Demand for construction materials from multiple disaster zones has created supply chain constraints and pricing pressure.

Contractor availability: Qualified contractors are booked months or years in advance, with many families competing for a limited pool of licensed builders.

A Stress Test for Insurers

Morningstar called the fires "a significant stress event" for California's property and casualty insurance sector. While the industry remained resilient, analysts warn that the state's insurance market remains vulnerable to another significant loss event.

The disaster has accelerated a broader retreat of major insurers from California:

  • State Farm stopped accepting new homeowner applications in California in 2023
  • Allstate and other major carriers have limited their California exposure
  • Premiums for wildfire-prone areas have doubled or tripled where coverage remains available

State regulators have implemented some reforms, including allowing insurers to use forward-looking climate models when setting rates. But critics say these changes may simply result in even higher premiums without addressing the fundamental insurability crisis.

Lessons for Homeowners

The LA fires experience offers painful lessons for homeowners across fire-prone regions:

  • Review coverage annually: Ensure rebuilding cost coverage keeps pace with construction inflation
  • Document possessions: Maintain video inventory of home contents to support claims
  • Understand policy limits: Know additional living expense coverage limits and duration
  • Consider excess coverage: Umbrella policies may provide additional protection
  • Create defensible space: Fire mitigation improvements may help maintain insurability

The Path Forward

As the one-year anniversary passes, recovery advocates are pushing for systemic changes: faster claims processing requirements, limits on premium increases after disasters, and expanded resources for the FAIR Plan. But for the thousands of families still displaced, policy reforms offer little immediate comfort.

The LA fires serve as a stark reminder of the financial devastation natural disasters can inflict—and the importance of adequate insurance coverage and emergency savings in an era of increasingly severe climate events.