(AP) — An insurance crisis continues to rattle California’s foster care system, threatening to displace thousands of vulnerable children.

Since 2024, more than two dozen nonprofits that recruit, train and support foster parents have shuttered across 13 counties, according to the California Department of Social Services.

Counties have historically relied on the licensed nonprofits, known as foster family agencies, to place children — especially those in need of intensive support — in certified homes until they are adopted or reunified with their birth families.

Their closures come two years after a key insurance carrier backed out of covering foster family agencies, citing rising legal costs. The company, Nonprofits Insurance Alliance of California, covered approximately 90% of the more than 200 foster family agencies operating throughout the state, leaving them scrambling to find a replacement.

No other California insurers have stepped in since then, forcing foster family agencies to secure coverage from companies outside the state — and sometimes, outside the country. In an unregulated market, that’s meant that agencies have seen increases of 200 to 400% in their liability coverage. Many are reporting cost hikes of more than $350,000 in annual premiums.

The Legislature last year approved a one-time $31.5 million allocation to buoy the agencies as they face unsustainable premiums, but the money has run out. Assemblymember James Ramos, a Democrat from San Bernardino, and Sen. María Elena Durazo, a Democrat from Los Angeles, recently requested another $30 million in relief funding.

But without any long-term policy solutions, advocates warn that the whole system is at risk of collapsing. It would start with some or all of the remaining foster family agencies closing. Foster parents, lacking the support that’s needed to sustain them, could then exit the child welfare system altogether and kids would face even more instability, the advocates say. And medically fragile children — including kids with feeding tubes, developmental disabilities or drug dependencies from their mothers — are especially at risk because counties don’t typically have sufficient resources to provide that level of care.

“It would be an absolute crisis if the foster family agencies closed,” said Diana Boyer, managing director of research and policy at the County Welfare Directors Association of California. “Foster children are the state’s children. We all collectively need to be doing more to support them and ensure that they have homes and families to go to.”

The crisis is tied to California’s attempts to provide redress to survivors of sexual abuse. Legislation passed in 2019 lifted the statute of limitations, allowing survivors to sue government agencies. Thousands of lawsuits have been filed since then, and hefty payouts have driven up insurance costs for public agencies across the board. Schools were among the first to feel the pinch from rising costs for insurance to cover liability from the suits.

The Nonprofits Insurance Alliance of California stopped renewing insurance policies following a $25 million jury award to three children after jurors found that a foster family agency in Santa Rosa failed to protect them from sexual abuse. The group had also made a mostly failed effort to reform aspects of California law related to insurance and liability.

‘Our collective responsibility’

Roughly 300 foster family agencies operate throughout California, providing critical services to approximately 6,500 of the state’s 45,000 foster children.

Counties run many of their child welfare placements through the community-based nonprofits because of their quality of care — especially for kids with the highest needs.

If a child is removed from their home in the middle of the night due to abuse or neglect, foster family agencies quickly step in with supportive homes that are “at the ready,” said Pete Weldy, chief executive officer at the California Alliance of Child & Family Services, which represents roughly 200 foster family agencies around the state.

After initial placement, the agencies continue to work with foster families and kids to provide sustained support, including around-the-clock care, crisis assistance, and consistent case management.

When an agency shutters, the child’s placement could be disrupted.

“That’s one of the untold stories of this whole crisis,” Weldy said. “It could mean that the youth has to move to a different county, to a different foster family.”