Starting October 15, California FAIR Plan will raise rates by an average of 29%. Last month, the California Department of Insurance (CDI) approved the increase, which is a significant rise for homeowners who not only want California FAIR Plan coverage but also need it to keep their home loan.
But let’s back up a minute. What is California FAIR Plan Insurance? It’s basic insurance that covers up to $3 million in replacement costs for fire and wildfire, lightning, smoke and internal explosions. Notably, it does not cover personal content or the cost of temporary housing, so a lot of homeowners will buy a wraparound policy to cover personal content and relocation costs. If you have a home loan, you must have insurance coverage that includes the cost of rebuilding the house in case of an unexpected emergency. This is essential to protect the lender, who doesn’t want to get stuck with a damaged home they can’t sell, and if you’re purchasing a home, it’s also essential that you get your coverage fast.
A few months ago, I wrote about starting the process of securing California FAIR Plan Insurance as early as you can, especially when you’re in escrow on a home. It can take about 30 days for the insurance process to be completed, and you certainly don’t want to hold up a sale because of your insurance!
OK, so now that we’ve got some clarity on California FAIR Plan Insurance, let’s talk about the upcoming changes in price. Beginning October 15, 2026, whenever a policy is set to renew, the policy holder will see (on average) a 29% increase in the cost of coverage. Some people may see higher increases, some lower, but you can expect about a 29% rise in your yearly premium.
During initial conversations, FAIR Plan asked the CDI for a 35.8% jump and the department granted 29%, which, as Deputy Commissioner for Communications at the California Department of Insurance recently told ABC10, is “still a huge amount for people … a big, unexpected expense.”
However, there could be good news on the horizon. The brand-new Sustainable Insurance Strategy is seeing insurance companies that paused or limited coverage returning to California. The Sustainable Insurance Strategy, according to the CDI, is giving insurance companies additional rate-setting tools while agreeing to write policies in high-wildfire-risk regions, so they can feel more secure about providing coverage. This means if you’ve tried to get coverage in the past and were denied, you might want to check back in with your insurance agent to see if things have changed. It also means you might be able to get fire and wildfire coverage outside of the FAIR Plan.
According to Soller, there are 12 insurance companies that write policies for 85% of homeowners in the state of California and so far, half of those companies are supporting the Sustainable Insurance Strategy and have agreed to write more policies. It’s certainly worth a conversation to see if there’s a company who will write a policy for your area.
To read more about these insurance-related changes, visit the CDI website here. If you’d like to discuss more details about insurance and home-buying in Los Angeles County, contact me for a complimentary real estate consultation.
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Andrew Manning • REALTOR® • Berkshire Hathaway HomeServices California Properties • DRE: 00941825 • 818-380-2147 • andrew@andrewmanning.com