California, October 12, 2025
News Summary
The California FAIR Plan aims to increase homeowners insurance rates by an average of 35.8%, effective April 1, 2026, contingent on state approval. This proposed hike, driven by significant losses from January’s firestorms, would be the largest in seven years. With current policyholders exceeding 591,000, homeowners are concerned about premium spikes, particularly for those not implementing fire risk reduction measures. The move has faced criticism from Governor Newsom and consumer advocacy groups, while the FAIR Plan justifies the increase as necessary to cover anticipated claims and expenses.
California
The California FAIR Plan is proposing an average rate increase of 35.8% for homeowners insurance, effective April 1, 2026, should the California Department of Insurance approve the request. If implemented, this would mark the largest rate hike in at least seven years and follows substantial losses from January’s firestorms.
Originating in Los Angeles, the FAIR Plan serves as a high-risk insurance pool established by the state. The Plan has already seen rate hikes of 20.3% in 2019 and nearly 16% in both 2021 and 2023. Following the recent wildfires, losses are estimated to be around $4 billion, forcing the FAIR Plan to assess its member carriers $1 billion to manage claims.
The impact of the proposed rate increase will not be uniform for all policyholders. Approximately half could see increases ranging from 40% to 55%, while some may even face increases exceeding 300%. Conversely, certain policyholders could enjoy decreases of up to 78%, especially those who implement fire risk reduction measures, which may qualify them for discounts of up to 15%.
The number of FAIR Plan policyholders has significantly risen, more than doubling since 2021 to reach approximately 591,000 due to conventional insurers withdrawing from the market in light of rising wildfire risks. Policyholders report that switching to the FAIR Plan often results in premiums that are more than double the standard rates, with the average cost now standing at around $3,200 annually. It is important to note that the FAIR Plan only covers fire damage, necessitating additional policies for liability and other risks.
The proposed rate increase has garnered criticism, particularly regarding the FAIR Plan’s handling of smoke-damage claims from the January fires. Homeowners have raised complaints, and legal action has been initiated as a result of their grievances. In June, a Superior Court judge found that the FAIR Plan’s smoke damage policy was in violation of state law. Following this ruling, state regulators issued a cease-and-desist order against the Plan.
Furthermore, California Governor Gavin Newsom has publicly condemned the FAIR Plan’s claims handling as “unscrupulous and unfair.” In response to the growing concerns, the California Department of Insurance has launched an investigation into the FAIR Plan’s practices with respect to smoke-damage claims, potentially leading to fines.
In its defense, the FAIR Plan argues that the proposed rate increase is essential for covering anticipated claims and expenses as well as accurately reflecting current wildfire risks. New guidelines for insurance now permit the inclusion of wildfire catastrophe models and reinsurance costs in rate calculations to better represent future conditions.
Other insurance companies in California, such as Mercury and CSAA, have requested smaller rate increases of 6.9%, while assuring their continued operation within the state. Consumer advocacy groups are advocating for a thorough review of the FAIR Plan’s rate change request and are calling for a pause on any increase until a comprehensive review of smoke damage claims is completed.
FAQ
What is the proposed average rate increase for the California FAIR Plan?
The California FAIR Plan is seeking an average rate increase of 35.8% for homeowners insurance, effective April 1, 2026.
What has contributed to the proposed rate hike?
This proposed increase would be the largest in at least seven years following billions of dollars in losses from the January firestorms.
How many policyholders are currently with the FAIR Plan?
The number of FAIR Plan policyholders has more than doubled since 2021, reaching 591,000 as of this summer.
What kind of coverage does the FAIR Plan provide?
The FAIR Plan covers only fire damage, requiring additional policies for liability and other risks.
What discounts are available to homeowners?
Some policyholders could experience decreases of up to 78%, with discounts of up to 15% available for homeowners implementing fire risk reduction measures.
Deeper Dive: News & Info About This Topic
- Coastside News
- Wikipedia: Homeowners Insurance in the United States
- Los Angeles Times
- Google Search: California Insurance Rate Hike
- San Francisco Chronicle
- Encyclopedia Britannica: Home Insurance
- CBS News
- Google News: California FAIR Plan
- Insurance Business Magazine
- Google Scholar: California FAIR Plan
Author: STAFF HERE HOLLYWOOD
The Hollywood Staff Writer represents the experienced team at HEREHollywood.com, your go-to source for actionable local news and information in Hollywood, Los Angeles County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Hollywood Bowl summer concerts, the Hollywood Christmas Parade, film premieres at TCL Chinese Theatre, and festivals at the Magic Castle. Our coverage extends to key organizations like the Hollywood Chamber of Commerce and Visit Hollywood, plus leading businesses in entertainment, dining, and tourism that define the local economy. As part of the broader HERE network, including HERELosAngeles.com, HEREBeverlyHills.com, HEREAnaheim.com, and HEREHuntingtonBeach.com, we provide comprehensive, credible insights into Southern California's dynamic landscape.
