In California’s Inland Empire, prospective homebuyers are encountering growing challenges securing comprehensive homeowners insurance, a trend that threatens affordability and complicates the state’s efforts to expand housing options.

Last spring, Alex Hwang, a tech worker, and his wife planned to move from the San Francisco Bay Area to a newly built six-bedroom home in Pulte’s Cimarron Ridge development, a community designed to offer more affordable housing. The home was priced at $700,000, a relatively moderate figure compared to Bay Area prices. Hwang expected the insurance process to be straightforward, as Pulte typically includes an insurance policy with the home purchase, and the location—situated on a scrubby hillside devoid of the dense timber or chaparral common in fire-prone regions—was not traditionally seen as a major wildfire risk.

However, as the closing date approached in June, the builder informed Hwang that its agents were unable to secure a comprehensive homeowners insurance policy through California’s regulated insurance market. The only coverage found excluded fire protection, a standard requirement by mortgage lenders. Faced with this issue, Hwang’s alternatives were limited. One option was to buy a partial policy through the California FAIR Plan, an insurer of last resort that provides fire coverage only, while separately purchasing another policy to cover other risks. The other option was the surplus lines insurance market, which primarily consists of out-of-state insurers that offer policies without state price regulations or guarantees, specializing in high-risk or difficult-to-insure properties.

Unfamiliar with the surplus lines market, Hwang ultimately chose this route due to the impending closing deadline. The policy he purchased, however, included a significantly higher deductible clause: in the event of a fire, he would be responsible for $25,000 out of pocket, notably higher than the typical deductible amount. Hwang described the situation as leaving him with “not much of a choice,” despite his dissatisfaction with the elevated financial risk.

This predicament highlights a broader issue in California, where increasing wildfire threats have led many major insurers to restrict coverage in certain areas, creating so-called “insurance deserts.” These gaps force homeowners into less regulated markets with higher costs and reduced protections, complicating efforts to maintain affordable housing and secure mortgages in regions that do not traditionally carry high fire risks. The challenges faced by buyers like Hwang underscore ongoing tensions between wildfire risk management, housing affordability, and insurance market stability in the state.