California FAIR Plan Rates To Jump Nearly 30% In October

California FAIR Plan Rates To Jump Nearly 30% In October

LCCN Staff Report

California homeowners relying on the state’s insurer of last resort are facing another major increase in insurance costs, with California FAIR Plan rates set to rise an average of 29.1% beginning Oct. 15.

The increase will affect the FAIR Plan’s more than 675,000 policyholders, although the amount individual homeowners pay will vary substantially depending on location and wildfire risk.

Homeowners in areas considered at high risk for wildfire could be hit particularly hard, with some wildfire-related premiums potentially doubling. Homeowners in lower-risk urban areas could see smaller increases and, in some cases, reductions.

The California FAIR Plan Association had sought an average rate increase of 35.8% from the California Department of Insurance last September. Regulators ultimately approved the lower 29.1% average increase.

The increase comes as California continues to struggle with a homeowners insurance market reshaped by catastrophic wildfires, rising construction costs and insurers reducing their exposure in high-risk areas.

The FAIR Plan was created to provide basic property insurance to homeowners unable to obtain coverage through the traditional insurance market. It was intended primarily as temporary coverage, but it has increasingly become the only realistic option for homeowners in some communities.

FAIR Plan enrollment has nearly tripled in recent years, growing from less than 2% of California homes to approximately 5%.

A Stanford University study released in June found that California homeowners insurance premiums have increased 84% since 2020.

The FAIR Plan’s financial exposure has also exploded.

As of June 2026, the FAIR Plan reported approximately $768 billion in total exposure, an 11% increase since September 2025 and approximately 250% higher than in September 2022.

That exposure is vastly greater than the FAIR Plan’s available cash reserves, estimated at between $200 million and $400 million.

The FAIR Plan does not operate like a traditional state-funded insurance program. It is an association of insurance companies authorized to conduct business in California. When catastrophic losses overwhelm its resources, the Plan can rely on reinsurance and other financing and can assess participating insurance companies, costs that under certain circumstances can ultimately be passed along to policyholders.

That system received an enormous test following the devastating Los Angeles County fires, which generated billions of dollars in claims.

There are some signs, however, that pressure on the FAIR Plan may be beginning to ease.

Although total enrollment continues to increase, new FAIR Plan business this year is reportedly down approximately 25% compared with last year.

California insurance regulators have pointed to the slowdown as a possible indication that changes implemented under the state’s Sustainable Insurance Strategy are beginning to encourage traditional insurance companies to return to the market.

More private insurers writing policies could give homeowners currently trapped in the FAIR Plan an opportunity to return to conventional coverage.

For homeowners who remain dependent on the FAIR Plan, however, the financial impact will begin arriving this fall.

The new rates take effect Oct. 15, 2026.