FAIR Plan Rates Set To Rise In October

CALIFORNIA — California FAIR Plan policyholders should prepare for higher fire insurance bills beginning October 15, when the state’s insurer of last resort is scheduled to implement an average 29.1% dwelling rate increase for new and renewing policies. For many foothill and mountain homeowners who cannot find private coverage, the change will affect one of the most expensive and difficult parts of maintaining a home in high fire-risk areas.

The 29.1% increase is a statewide average, not a flat increase across all policies. The FAIR Plan has said much of the change is tied to the wildfire portion of premiums, meaning higher-risk properties may see increases above the average, while some lower-risk policyholders could see smaller increases or decreases.

For a homeowner paying $3,000 a year for a FAIR Plan policy, a 29.1% increase would add about $873 if the policy rose with the statewide average. A $5,000 policy would rise by about $1,455. The actual change will depend on the property, coverage limits, endorsements, wildfire risk, and available discounts.

The approved increase is smaller than the FAIR Plan originally requested. In a September filing, the plan sought an average 35.8% dwelling rate increase, but the California Department of Insurance ultimately approved a lower final increase of 29.1%.

FAIR Plan rates are based on risk exposure, actuarial analysis, administrative expenses, and the net cost of reinsurance. Reinsurance is insurance for insurance companies, helping cover large losses when disasters produce many claims at once. The latest filing was also the first FAIR Plan dwelling rate filing reviewed under California’s Sustainable Insurance Strategy guidelines, which allow wildfire catastrophe modeling and some reinsurance costs to be considered in rate review.

The decision comes as the FAIR Plan continues to grow far beyond its intended role as a limited safety net. As of March, the plan reported 684,388 total policies, up 152% since September 2022. Its total exposure reached $750 billion, and its written premium reached $2.02 billion.

The growth reflects a broader problem in California’s insurance market. Traditional insurers have reduced new business or declined to renew policies in many wildfire-prone areas, pushing more homeowners toward the FAIR Plan. A California Department of Insurance fact sheet found FAIR Plan growth has been strongest in counties with higher concentrations of homes at high wildfire risk, including Nevada and Sierra counties.

Losses from the January 2025 Palisades and Eaton fires added more pressure. The Department of Insurance said the FAIR Plan had received 4,794 claims from the fires, had paid $914 million to policyholders, and estimated its total loss from the two fires at about $4 billion. The department approved a $1 billion assessment on FAIR Plan member insurers, the first assessment of its kind in more than 30 years, to help the plan continue paying claims.

For homeowners who have been forced onto the FAIR Plan, the October rate increase is another sign of how expensive and limited fire insurance has become in California’s wildfire regions. The issue was also the focus of a town hall held by Assembly District 1 Representative Heather Hadwick last week. State officials have said the long-term goal is to move more policyholders back into the private market, but for many foothill and mountain residents, the FAIR Plan remains the only practical way to maintain required fire coverage.