California Politicians Now Want Oil Companies, Not Insurers, To Subsidize People Living in Wildfire Zones
A proposed state bill would allow individuals and insurers to sue oil companies for wildfires damages.

For decades, California's byzantine insurance regulations effectively forced insurers to subsidize people living in wildfire-prone areas.
With the recent devastating wildfires in Los Angeles exposing the state's already in-crisis property insurance industry to tens of billions in losses, lawmakers are now proposing to shift the cost of that subsidy onto oil companies.
Earlier this week California lawmakers introduced Senate Bill (S.B.) 222, which would allow individuals, private insurers, and the state-run insurance plan to sue oil companies for damages they suffer from "climate disasters and extreme weather events."
"By forcing the fossil fuel companies driving the climate crisis to pay their fair share, we can help stabilize our insurance market and make the victims of climate disasters whole," said California Sen. Scott Wiener (D–San Francisco), one of the bill's authors, in a press release.
Early estimates peg the economic damage of fires at $250 billion. Insurers' losses could be as high as $45 billion.
California's state-administered FAIR Plan, a property insurer of last resort, has just $337 million in reserves and is exposed to an estimated $6 billion in losses from the recent fires.
FAIR will raise that money via a special assessment on private insurers, who can then pass the costs onto individual policyholders. Private insurers are themselves asking for rate increases of as much as 50 percent in response to the fires.
By shifting financial liabilities for the wildfires from insurers and insured onto oil companies, S.B. 222 could spare individual insurance policyholders from what's sure to be a politically unpopular double whammy of a special FAIR assessment and hiked premiums.
The bill is "a twist on preexisting California law that allows insurers to collect from public utilities if there's any nexus between wildfire and utility lines," says Ray Lehman, a senior fellow at the International Center for Law and Economics.
One distinction is that a utility company's downed power line or sparking transformer can be (and has been) a direct cause of a destructive fire.
In contrast, emissions from oil companies (and their customers) are not the direct cause of any wildfires. They are a contributing factor to climate change, which is then a potentially contributing factor to the frequency and severity of wildfires.
States' past efforts to sue oil companies over the effects of climate change, which often rely on creative interpretations of nuisance or security fraud law, have been typically slapped down by courts.
But a tenuous direct link between oil companies' activity and the Los Angeles wildfires won't prevent lawmakers from making them liable for the fires anyway on climate change grounds, says Walter Olson, a legal scholar at the Cato Institute.
"There is something of an open door to states doing dangerous things in terms of assigning liability to nationwide and worldwide production processes," he tells Reason.
Lawmakers also have a lot of freedom to establish the kinds of defenses oil companies could use in response to insurer lawsuits, meaning that they can prevent them from using defenses that would allow them to actually win those lawsuits, says Olson.
Oil companies might be able to argue that California's proposed law is preempted by federal air pollution regulations, or deploy defenses that limit the amount of wildfire damages they are responsible for.
But, ultimately, if California wants to pass a law that allows insurance companies to sue oil companies for wildfire damages and easily win those lawsuits, there's no "slam dunk" constitutional argument against it, says Olson.
An irony of S.B. 222 allowing insurance companies to sue oil companies over losses from "climate disasters" is that, up until very recently, insurers themselves were forbidden from factoring climate risks into their premiums.
For decades, California regulations said that insurers could only cite averaged past losses from wildfires to justify premium increases.
That effectively forbade them from using forward-looking catastrophe models that factor in the increasing severity and frequency of wildfires caused by climate change. Proposition 103 also forbids insurers from passing on the rising costs of reinsurance (which does factor in the increased risks of climate change) to customers.
These regulations combined to keep California's insurance rates well below market rates, which in turn created a crisis of insurers not renewing policies and not issuing new ones.
To forestall a total collapse of the property insurance market, Ricardo Lara, California's insurance commissioner, issued emergency regulations in December 2024 that at last allowed insurers to use catastrophe models in setting premiums and pass on reinsurance costs to customers.
Those reforms came a little too late to shore insurance company finances before the Los Angeles fires that broke out just a week later. They also were likely to be hit with legal challenges from consumer advocates.
The president of Consumer Watchdog, the group that was the driving force behind the ballot initiative that created California's insurance regulatory regime, called Lara's reforms "the worst type of power grab" in comments to the Los Angeles Times.
Consumer Watchdog is now one of the leading groups supporting S.B. 222.
Making oil companies liable for wildfire damages would certainly save both the insured and the insurer a lot of money.
Olson suggests the law could even lead to lower insurance premiums in California, as insurance companies cut rates to attract customers, safe in the knowledge that any wildfire losses they suffer could be recouped by suing oil companies in sure-to-win lawsuits.
While S.B. 222 would shore up the finances of insurance companies on the backs of oil companies, it would nevertheless undermine the purpose of insurance. Insurance premiums relay important information to homeowners about the risks of building in wildfire-prone areas and the safety benefits of fire-safe building practices.
That useful function is of increased importance in a world where climate change is making the dangers posed by wildfires to people and property more severe.
By shifting liability onto oil companies, S.B. 222 would leave consumers bereft of better information about the risks of climate change-enhanced natural disasters.
The bill would create a strange situation in which oil companies would be effectively subsidizing people to put themselves and their property at more risk of climate-related disasters.
Rent Free is a weekly newsletter from Christian Britschgi on urbanism and the fight for less regulation, more housing, more property rights, and more freedom in America's cities.
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Libertarian Michael Shellenberger gives explanation in autistic detail for California wildfires.
If Reason did coverage like this...
Haven't these areas experienced wildfires since the time the original fossil fuel sources were wandering the earth?
See my link above. L.A. precipitation hasn't changed since 1876. L.A. used to know how to deal with wildfires. This is yet another thing that people pretend to not now how to do that everyone used to know how to do.
I don't know that far back but the geologic and historical records certainly support your point for the past two-to-five thousand years or so. Wildfires in that part of the world so normal that entire species have evolved to take advantage of their periodic passage.
I think it may be about the drought, which makes me wonder why the Pharoah never sued the oil companies.
I think it may be about the drought
Almost. Usually if you read the article below the headline you'll find that what they mean when they say "climate change did this" is that a climate scientist that they found said that while droughts are normal in California, all other things being equal if it's hotter rather than cooler it will be even drier and the fire risk will be higher.
Add in the unexamined "we know it's much hotter than it should be" assumption, and presto - climate change did this (even though no climate scientist actually made that assertion).
Sounds like a great idea.
With the best of intentions.
What could possibly go wrong?
Can you imagine Arco, Shell, Valero, etc., etc., etc. pulling out of California? Good time to invest in bicycles.
"California's byzantine insurance regulations effectively forced insurers to subsidize people living in wildfire-prone areas."
This is false. Insurers subsidize no one. Ever. Insurance customers living in non-wildfire-prone areas through higher premiums subsidize those living in wildfire-prone areas. Insurers are forced to shift costs from those at lower risk to those at higher risk which is likely to be profit-neutral.
I live in a wildfire-prone area. My insurance company has been very transparent about risk and cost. Some years ago, there was no "manned fire station" within 5 miles of my house. The circumstances kept my premiums high. A couple years ago, my county installed a new manned station that happened to be within the five-mile perimeter. My premiums dropped $1300 per year.
A lesson which statists will deny and never believe.
Until the State Insurance Commissioner forbids those rate increases as well
Tht's the issue. Britches is willfully ignorant of this fact. He calls it "Byzantine" insurance regulations, but the deal is simple.
The insurance companies have to submit their rates to the commissioner and he can approve, disapprove, or ignore (then they go into effect without approval) within a certain time.
The problem is that the commissioner has been rejecting rate increases, under the socialist guise of protecting the consumer from the evil insurance company who is trying to gouge them. Insurance companies are increasingly deciding that they cannot be profitable at the allowed rates, so they take their ball and go home.
It's not complicated. It's not byzantine. It's just the hoary political problem of someone saying "I'm doing this for you" and expecting someone else to pay for it, like the laws of supply and demand, or the fundamental economics of money out vs money in, are no longer in effect.
The same logic here would have grocery store chains be liable for damages from a backed up sanitary sewer because those stores sell what becomes feces
Like it or not, the oil companies are providng a product that is essential for a modern economy and society. Even if "climate change" was entirely non-controversial, we cannot really stop using fossil fuels and maintain our level of prosperity without a technological breakthrough to replace combustion engines that does not exist yet.
On the other hand, to be sure, it will be popcorn-worthy to watch the state of California try to prove in court, under oath, that first, global climate warming change is in fact a fact, and that in addition, it is just because of the oil companies.
it will be popcorn-worthy to watch the state of California try to prove in court, under oath, that first, global climate warming change is in fact a fact, and that in addition, it is just because of the oil companies
^ ^ ^
Sadly, they won't have to if they simply, as a matter of legislation, forbid the oil companies from making those arguments in court. There are ample precedents in insurance law allowing legislatures to put inconvenient facts out of scope for courts to consider.
Why not allow insurance companies to also sue vaccine manufacturers? If they work as well as we are told it keeps kids alive. The kids grow up to produce many tons of carbon. Therefore vaccines cause climate change. Let's take it one step further and allow insurers to sue policy holders for losses, because the homeowners caused their own climate change.
Why does the Left hate oil?
Not Newsom. You seen his hair?
Because oil money tends to fund Republicans.
Why does the Left hate?
Because they are scared to death of being personally responsible for anything in their lives. They were coddled as children, coddle in schools, coddled to join all the right community service associations to get into college, coddle in college, coddle in service jobs, coddled, coddled, coddled, and the real world of adults being personally responsible for anything literally gives them nightmares.
So they have to assume it gives everyone else nightmares too.
Therefore any denying those nightmares is literally insane.
They only hate it until they want it to save them, or pay for their stupidity.
Leftism is CANCER.
A big bone thrown to the Trial Lawyers Association which is... not surprisingly a large contributor to the Democratic party.
2026: Why is gas $20/gallon in California?
They're passing along the costs of global warming to the consumers who are causing it.
1) It's climate change
2) It's Trump's fault
If you're a Californian, those are the only reasons for any problem, from a nuclear war to dandruff.
Why not sanction the grocery stores that sold food to the asinine politicians and bureaucrats that approved residential development in high risk fire areas?
Just about every government - city, county, and state - in California has a corporate gasoline credit card to fuel their fleet of vehicles. They all say oil companies are at fault for everything imaginable. It would be unproductive for Big Oil to stop selling to government, but they could cancel the cards, making the government people use debit or credit cards, or cash to purchase fuel.
Now picture a bureaucrat at the DMV or planning office being given any of the three and being told to be careful.
Just like insurance companies have pulled out of the state, if this passes, it wouldn't be surprising if oil companies did the same. It wouldn't stop them from being sued, but they would at least have the argument that they aren't subject to California jurisdiction.
I saw video footage of a high voltage power line supposedly starting one of the fires. Good news, they can sue the power company and recover all the damages. Just like the last time, the power company will be bankrupted but people will feel better. Note, I believe I heard that the power company shut off electricity at the start of the fires as they did not want to get blamed again. That also shutoff many water pumps... Oops.
But, yes, blame climate change for this. That will divert blame from those actually running the place. I live in Iowa where our moron leaders are mental giants in comparison.
Just like the last time, the power company will be bankrupted but
people will feel betterthe government will bail them out.FTFY
No, the government won't.
What happens is, they just approve passing the cost on to the customers. Trust me on this one, I have literally the highest electricity rates in the nation.
Every time the government passes the buck, it stops at the ratepayers. Not the shareholders, not the government.
This is the result of leftist, climate hysteria madness. Why not blame humanity. That is really the end goal, isn't it? The climate ideologists blame humanity for natural calamities. They want human populations reduced, and they want to choose which populations.
pssst... you're not supposed to notice that.
This is the result of letting emotional, immature people have too much say. I know that does not sound libertarian, but neither does empowering idiots who seek to destroy prosperous, rational society.
'They are a contributing factor to climate change, which is then a potentially contributing factor to the frequency and severity of wildfires."
Horse shit.
I'm assuming that word potentially is doing a lot of heavy lifting in that argument. Might as well blame a single butterfly in the Amazon rainforest for the wind direction in LA because "potentially" that is the but for cause of the fire travelling in the direction it did.
Gas $2.000
Cal Expenses 1.500
Fed Tax 0.184
Cal Gas tax 0.300
Cal addt tax 0.050
Environ programs 0.540
Weiner tax $15.000
Gas Price $19.574
Shouldnt people be suing themselves for burning the oil? Thats what they claim creates all the greenhouse gases. Drilling oil, refining it, selling it, doesnt do that. Sue the public power companies (and thus themselves again) for producing electricity from oil.
When you make electricity from sources that produce carbon, the electricity fairy magically forgives all emissions.
"But Exxon lied!"
Why doesn't California just collectivize all private property in the state, outlaw private risk insurance in favor of a state owned FAIR program for everyone, and send all dissenters (probably about 15 million) to Gulag Alcatraz.
Turn out the lights, nobody sane in California leadership. Wait, Newsome is trying to go exactly that
Oil companies should pull out of California like the insurers did.
The climate grift, like the rest of the green grift, and the race grift, gender grift (versions 1.0, 2.0, and 3.0), socialist grift, and now the repackaged "critical theory" grift, is all about money and power. You have it, and they want it.
to pay their fair share
The moment you hear someone say that in a sentence, just punch them in the mouth as hard as you can. Nothing good ever comes from those five words. Ever.
Making oil companies liable for wildfire damages would certainly save both the insured and the insurer a lot of money.
Why don't we make LeBron James liable for it? Or Bill Gates. They've got money too. And since we're just arbitrarily assigning blame here, why not?
For the record, I would not be the least bit shocked if every insurer in America - home, life, auto, health, business, malpractice, rent, pet, whatever - pulls out of California by 2030. That State is openly telling the world that they, and everyone in it, are 100% uninsurable.
The moment you hear someone say that in a sentence, just punch them in the mouth as hard as you can.
It's either the climate or the location of that state that causes stupidity and short sightedness.
Somehow this latest idea brought forth by a Californian politician could only happen because of such. There can be no other explanation.
At any rate, the Hollywood elites continue to hold and unwarranted moral and intellectual superiority above the rest of us.
Those people in that meet in Sacramento are not politicians they are a gaggle of idiots.
Why STEAL? Just BAN all fossil fuels in CA and see just how contained those fires get! /s
Talk about blaming the very solution.
How is it even possible humans can get so stupid?
This won't get far.
Fire insurance should be very expensive in these wildfire prone areas. That's the only way to keep people from building back there. Just don't live in flood plains and super-dry areas near parched forests.
This is entirely wrong
https://www.heritage.org/courts/event/the-history-natural-law-american-law
JUST FOLLOWING THE UTTERLY STUPID BIDEN. Did REASON say a word about this godawful and stupid waste
Biden roasted for sending South Africa $8 billion to shut down coal plants: ‘Weapon-grade lunacy’
The president said coal-fired power plants would be replaced with renewable energy sources