Wildfire risk is rising across California and other western states ahead of Fourth of July. Dry vegetation, warmer temperatures, and heavy fuel growth following recent wet years are all contributing factors. The American Property Casualty Insurance Association (APCIA) has warned that fireworks use is compounding that risk at a moment of acute pressure for property insurers.
Americans spend approximately $2.2 billion annually on consumer fireworks. The National Fire Protection Association (NFPA) reports fireworks sparked more than 32,000 fires in a single year. The Consumer Product Safety Commission (CPSC) reported nearly 14,700 people were injured and 11 died in 2024 due to fireworks-related incidents.
Karen Collins, APCIA vice president for property and environmental policy, said the combination of conditions was creating a dangerous environment for fast-moving wildfires.
"One spark can travel long distances and ignite a devastating fire, putting entire communities at risk," Collins said.
The fireworks warning lands against an exposure backdrop that the market has been grappling with for years. The Cotality Wildfire Risk Report 2025 identified nearly 2.6 million homes at moderate or greater wildfire risk across the western US. Those properties represent $1.3 trillion in reconstruction value.
California accounts for 1.26 million at-risk properties worth approximately $796.1 billion. The report documented what it called "the underinsurance shock:" dwelling limits can lag true reconstruction costs by six figures or more.
Rebuild costs have risen 47% since 2020, according to APCIA. Many homeowners hold policy limits that no longer match current reconstruction costs. That gap has become one of the most persistent problems in the western property insurance market.
The underinsurance problem is compounding a parallel market access crisis in California. California's FAIR Plan enrollment jumped 43% between September 2024 and December 2025. In 2025, the state approved a 17% emergency rate hike for State Farm after billions in fire losses.
A Bloomberg analysis found 28% of total FAIR Plan exposure now sits in largely urban, lower-risk zones. Carrier pullbacks are spreading beyond the wildland-urban interface.
Wind-driven embers are the leading cause of home ignitions during wildfires. APCIA said the five-foot zone around a structure is the most critical factor in whether it survives a wildfire.
A joint framework published by Insurance Institute for Business & Home Safety (IBHS) and APCIA in March 2026 sets science-based standards for that five-foot zone. Research cited in the framework found that every dollar spent on hazard mitigation saves up to $33 in disaster costs.
More than 20 states have accepted AI-driven wildfire models in rate filings, a sign of a broader shift toward property-level risk analytics in underwriting.
Collins said a single unextinguished firework can trigger a fire capable of spreading through entire neighborhoods.
