A San Francisco-based insurance company leveraging artificial intelligence promises to reshape home insurance in parts of the U.S. facing some of the worst climate risks.
In 2024, a group of Silicon Valley tech veterans launched Stand Insurance, using what the company describes as physics-based AI models to underwrite policies and create customized fire resilience plans for properties in California’s wildfire-plagued areas where homeowners often struggle to secure coverage from traditional carriers.
Last month, Stand raised $35 billion in a Series B funding round to expand coverage in hurricane-battered Florida, where homeowners have been struggling to find insurance options from a limited pool of carriers and having to contend with sky-high premiums.
“Traditional ways to price insurance don’t work in an environment that’s so unpredictable,” Stand co-founder and CEO Dan Preston previously told The Wall Street Journal, referring to climate-related risks.
Realtor.com® has reached out to Stand for comment.
Stand currently provides coverage for homes in California valued between $3 million and $15 million, with a combined total insured value of more than $1 billion statewide.
What separates Stand from typical insurance companies is what it describes as its science-based approach to risk assessment and mitigation.
“We use AI to understand the true risk of your property and help you make your home insurable,” Stand’s website states.
Most standard carriers determine whether or not to insure a home based largely on its location: if a property sits in a fire or flood zone, the company is more likely to deny coverage, or increase premiums, to protect the bottom line.
Stand, on the other hand, takes into account not just the location of the property but also the homeowners’ efforts to make their dwelling more resilient.
Here’s how it works: Stand’s software creates what the company calls a “digital twin” of each home based on data on the materials used in the construction—and even the type of tree species planted in the backyard.
AI models then simulate how fire, wind, embers, and water would affect a property in the event of a disaster, assigning a quantified percentage to each risk.
The next step is to develop a bespoke plan to reduce the risks and make the property safer, like replacing the windows or roof shingle, clearing the brush around the home, or swapping a wooden fence for a steel one.
California’s insurance crisis
Fire risks, mitigation, and insurance have been at the center of intense debate in California this year, following the deadly January wildfires in Los Angeles County, which caused economic losses between $76 billion and $131 billion, with insured losses estimated at $45 billion, according to the UCLA Anderson Forecast last updated in March.
Across the Golden State, roughly 1.3 million homes with a combined reconstruction cost value of more than $791 billion face moderate or greater risk of wildfire, according to a recent report from Cotality, a property data analytics firm.
Nationwide, close to 3 million homes are threatened by wildfires.
Even before the devastating Palisades and Eaton fires, California has been in the throes of an insurance crisis, with homeowners living in high-risk areas struggling to secure coverage at any cost.
Following several large-scale infernos that scorched through California in recent years, some of the largest private insurance carriers stopped offering new policies in areas with elevated risk, and those that remained have been granted permission from the state to hike rates.
The private insurers’ pullback has forced hundreds of thousands of homeowners to seek coverage through the FAIR Plan, California’s insurer of last resort. As of June, the state-backed insurance provider reported $650 billion in total exposure, a 42% jump since September 2024.
The number of policies on FAIR Plan’s books swelled to over 610,000, up more than 30% compared with nine months prior.
Florida is AI’s next frontier
Emerging against this challenging backdrop, Stand appears to offer wealthy California homeowners an alternative—as it prepares to do the same in Florida, providing hurricane and wind protection for homes and condos priced at $500,000 to $2 million.
A 2025 hurricane risk report from Cotality found that Florida was the nation’s most at-risk state for hurricane and wind damage, with more than 8.1 homes exposed to moderate or greater risk.
Repairing or rebuilding those properties would cost upward of $2.3 billion.
Similar to California, Florida has seen insurers balking at the elevated risk levels and withdrawing from some of the most vulnerable areas, in part due to high litigation costs.
Recently, however, there have been signs of improvement, with more carriers offering policies in Florida and rate increases slowing thanks to legal reforms and regulators’ changes.
As a result of this shift, Florida’s insurer of last resort, Citizens Property Insurance Corp., which has acted as the state’s largest carrier, has been reducing its policy load as part of what it calls its “depopulation” program.
By the end of the year, Citizens is expected to shrink by more than 510,000 policies, which will be assumed by private insurers, reported WUSF.
As of early November, Citizens still had roughly 560,000 policies, down from a peak of 1.4 million two years ago.
Industry experts weigh in
However, industry experts and stakeholders are divided over whether taking the human element out of insurance underwriting is a good idea.
“I think that the use of AI is a great tool, [but] it’s not a solution for underwriting,” Jamie Levenshon, senior vice president of the commercial real estate division at Insurance Office of America and a board member of the Florida International University School of Real Estate, tells Realtor.com. “You’re losing the human element to underwriting, which I think is pretty dangerous”
Levenshon maintains that every homeowner has a different level of risk tolerance, and she argues that underwriting professionals can come up with “much more creative ways” to structure a comprehensive coverage plan than an AI model could.
Levenshon does not dismiss AI modeling out of hand, but argues that it has limitations, especially in Florida, where the risks and mitigation techniques are vastly different from those in California.
“Wind and water work very differently than fire,” she explains. “The mitigation that has to come from a roof being blown off is very different than the mitigation of smoke. … During a wind event, a hurricane, the wind is blowing for eight hours. It’s a completely different beast.”
She adds: “I think that there is a place for AI in underwriting as far as being able to better model the risk, but as far as the underwriting element to it, I’m skeptical because I think that you still need humans to evaluate risks.”
Critics have also pointed out that AI models tend to be self-contained and opaque, making it difficult to verify their accuracy, or challenge their risk assessments in case a homeowner’s claim is denied or the monthly premium goes up, as Bloomberg reported.
Lindsey Klarkowski, policy vice president for data science at the National Association of Mutual Insurance Cos., says the use of AI in insurance has several advantages to consumers, including identifying ways to make homes more resilient, fraud prevention and detection, and increased efficiency.
“Though, it’s important to note that AI use is simply one piece of the equation, especially in the context of coverage availability and pricing,” she tells Realtor.com. “AI can lead to increased precision in risk-based pricing, and has been shown effective in certain mitigation efforts, which can both lead to cost savings. But, those cost savings may be offset by massive losses brought about by changing weather patterns, litigation excesses and abuse, or otherwise, thereby underscoring the need to focus on cost drivers the industry can control.”
Asked about the possibility of claim denials based on AI assessments, the NAIMC official says that in Florida, existing state insurance law stills applies.
“Artificial intelligence is a tool added onto or incorporated into processes that already fall within the purview of existing insurance law,” explains Klarkowski. “It is not an end-run for the insurance companies around a state’s statutes, regulations, and consumer protections.”
She adds that on the whole, new technological advances in insurance stand to benefit consumers and the broader marketplace.
“Whether for better understanding and more accurately pricing risk, improved mitigation, or operational and other efficiencies, AI use could potentially address challenges for Florida, just as with other markets and homeowners around the country,” concludes Klarkowski.
