The wildfires, which began on January 7th, 2025, ignited under extremely critical fire weather conditions, rapidly spreading through Southern California. The fires have caused significant property damage, particularly in areas like Pacific Palisades, Pasadena, and Altadena. Nearly 180,000 residents were forced to evacuate their homes, and the fires are already considered the most destructive in the city’s history.

“As the magnitude of the losses in Southern California becomes clearer, our concern for the lives impacted only deepens. We are responding, as we always do in tragedies like this, to deliver on our longstanding mission to help people recover from the unexpected,” said State Farm.

While the fires are not yet fully contained, early estimates suggest insured losses could range from $15 billion to $40 billion, with economic losses potentially reaching $150 billion to $275 billion. Much of the financial burden is expected to fall on primary insurers, although the potential for reinsurance recoveries may help mitigate some of the impact.

State Farm is not the only insurer impacted by these events. Mercury General has also reported that its losses are expected to exceed its $150 million reinsurance retention.

California’s FAIR Plan, the state’s insurer of last resort, is also expected to face significant claims. Some estimates suggest that FAIR Plan losses could reach up to $8 billion.

This event underscores the increasing frequency and severity of wildfires in California and highlights the significant challenges facing the insurance industry in managing these risks.