California’s FAIR Plan will raise rates 29.1% for certain homeowners starting Oct. 15. The highest increases will apply to policyholders in fire-prone areas with elevated wildfire risk.
The Fair Access Insurance Requirements Plan has become the main fallback for homeowners and businesses unable to find coverage in the standard market.
The plan is backed by six standard insurance companies for wildfire damage only.
The FAIR Plan first requested a 35.8% increase to avoid deeper financial strain, according to Michael Soller, spokesman for the California Department of Insurance. Regulators approved a lower increase, but the change still adds pressure for households already paying high premiums.
As of the end of 2025, about four in five of the plan’s more than 668,600 homeowner policies would have seen bills rise by 5% to 60% if the larger request had been approved.
The final impact will vary by policy and wildfire exposure.
The FAIR Plan’s policy count rose 44% to 668,600 at the end of 2025, up from 464,900 in fall 2024. That increase came before January wildfires destroyed communities across Los Angeles County.
Private insurer claim rejections and pullbacks from new underwriting pushed more consumers into the plan.
Total FAIR Plan exposure climbed to $724 bn as of Dec. 31, 2025, a 230% jump from fall 2024.
Soller said the Department of Insurance is beginning to see signs of market improvement after several insurers raised concerns about financial stability. State Farm has been the largest of those companies.
A FAIR Plan spokeswoman said not every customer will see premiums rise by 29.1%. The largest part of the increase relates to wildfire coverage, so homeowners with higher wildfire exposure will see larger changes, while some policyholders may see premium decreases.
In 2025, Insurance Commissioner Ricardo Lara introduced a new catastrophic modeling system known as the Sustainable Insurance Strategy. The framework lets open-market insurers set rates using certain risk models.
Under the system, insurers can raise prices based on growing climate-related risk and pass higher costs for covering high-risk homes to customers. In exchange, carriers are expected to write more policies in fire-prone areas where many had reduced or ended coverage.
Consumer advocates remain skeptical of the reforms. They argue the system will keep pushing rates higher and doubt insurers will write enough policies in wildfire-exposed communities.
Advocates also point to regulatory gaps, including the exclusion of some fire-prone neighborhoods from state maps where insurers must increase policy writing.
Carmen Balber, executive director of Consumer Watchdog, said the rate increase will be a major blow for consumers who already believe they pay too much for limited FAIR Plan coverage.
Joy Chen, executive director of the Every Fire Survivor’s Network, said California faces two intersecting crises. She described them as failures of insurance accountability and the current insurance commissioner.
Chen said many consumers have paid homeowners insurance premiums for years without receiving the benefits they expected. She described Los Angeles fire survivors as early warning signs for the wider market.
Earlier this month, Lara took legal action against State Farm, alleging the company mishandled wildfire claims in Los Angeles fire zones. The regulator is seeking up to $4 mn in penalties tied to 398 alleged violations of state law after a seven-month investigation.
Lara said State Farm underpaid claims and was slow to investigate home damage and possible smoke contamination after the January 2025 fires. He also wants to bar State Farm, California’s largest home insurer, from writing new policies for one year.
The January firestorms in Pacific Palisades and nearby Malibu burned more than 23,448 acres. They killed 12 people, destroyed 6,837 structures, and damaged nearly 1,000 more before being extinguished on Jan. 31.
The Altadena fire burned more than 14,021 acres, killed 19 people, destroyed 9,414 structures, and badly damaged another 1,074. Customers have been slow to return because so much of the community was destroyed.
