California, October 12, 2025
News Summary
The California FAIR Plan proposes a 35.8% average rate increase for homeowners insurance effective April 1, 2026, pending approval from the Department of Insurance. This marks the largest hike in years, driven by significant losses from recent wildfire claims. While half of policyholders may face increases between 40% and 55%, some could see reductions. Consumer groups have criticized the FAIR Plan for its handling of smoke-damage claims, leading to an investigation by the Department of Insurance amid concerns over fairness and transparency.
California is set to see a significant increase in homeowners insurance rates as the California FAIR Plan proposes an average rate increase of 35.8% for homeowners insurance, effective April 1, 2026, pending approval by the California Department of Insurance. This proposed increase marks the largest rate hike in at least seven years and comes on the heels of immense losses from the catastrophic firestorms that swept through the state in January.
The Los Angeles-based California FAIR Plan was created as a high-risk insurance pool for homeowners who struggle to find coverage due to rising wildfire threats. The plan has previously implemented notable rate hikes of 20.3% in 2019 and nearly 16% in both 2021 and 2023. With estimates indicating about $4 billion in losses attributed to recent wildfire claims, the FAIR Plan has had to assess its member carriers an additional $1 billion to settle these claims.
Homeowners can expect the impact of the rate increase to vary significantly across the board. Approximately half of all policyholders might face increases between 40% and 55%, while some could see decreases of up to 78%. Alarmingly, a small fraction of policyholders may even encounter increases exceeding 300%. Conversely, sets of discounts up to 15% are available for those who take proactive measures for fire risk reduction.
The number of policyholders under the FAIR Plan has surged, having more than doubled since 2021 to reach 591,000 this summer. Many homeowners report that they are paying double or more than they used to with private market rates, with average annual costs hitting $3,200; this figure is more than twice that of a standard insurance policy. Notably, the FAIR Plan only covers fire damage, necessitating additional policies to cover liability and other risks.
The proposed rate increase has not gone without criticism. Many homeowners have issued complaints against the FAIR Plan’s handling of smoke-damage claims pre-dating the increase. A recent ruling from a Superior Court judge found that the FAIR Plan’s smoke damage policy violated state law, which led state regulators to issue a cease-and-desist order against these practices. Both consumer advocacy groups and Governor Gavin Newsom have raised significant concerns about the situation, describing the FAIR Plan’s claims handling as unscrupulous and unfair.
Moreover, the California Department of Insurance is conducting an investigation into the FAIR Plan regarding its practices for smoke-damage claims, with potential fines on the horizon. The FAIR Plan defends its proposed rate hike, arguing it is crucial to accommodate anticipated claims and expenses while staying aligned with current wildfire risks. New insurance guidelines have now allowed for the incorporation of wildfire catastrophe models and reinsurance costs into rate calculations, purportedly to better represent foreseeable conditions.
In contrast, other insurers within California, such as Mercury and CSAA, have filed requests for lower rate increases of approximately 6.9%, indicating a commitment to remain competitive in the California market. Consumer advocacy groups are actively calling for a rigorous examination of the FAIR Plan’s raised rates and are urging that any increase be delayed until the issues surrounding the smoke-damage claims have been fully resolved.
FAQs
What is the proposed rate increase by the California FAIR Plan?
The California FAIR Plan is seeking an average rate increase of 35.8% for homeowners insurance, effective April 1, 2026, if approved by the California Department of Insurance.
Why is this proposed increase significant?
This proposed increase would be the largest in at least seven years following billions of dollars in losses from the January firestorms.
What has the FAIR Plan experienced since 2021?
The number of FAIR Plan policyholders has more than doubled since 2021, reaching 591,000 as of this summer due to insurers withdrawing from the market amid rising wildfire risks.
What is the impact of the rate increase on policyholders?
Rate increases will impact policyholders unevenly; roughly half may see increases between 40% and 55%, while some could experience decreases of up to 78%.
What criticisms has the FAIR Plan faced?
The proposed rate increase has faced criticism for the FAIR Plan’s handling of smoke-damage claims from the January fires, leading to legal action and complaints from affected homeowners.
Key Features of California FAIR Plan Rate Increase Proposal
| Feature | Details |
|---|---|
| Proposed Rate Increase | 35.8%, effective April 1, 2026 |
| Previous Rate Increases | 20.3% (2019), nearly 16% (2021 and 2023) |
| Estimated Losses | $4 billion from recent wildfires |
| Policyholder Distribution | 50% may see increases between 40% and 55%; some may see decreases of up to 78% |
| Number of Policyholders | 591,000 as of summer 2023 |
| Average Annual Costs | $3,200, more than twice that of a standard policy |
Deeper Dive: News & Info About This Topic
- Coastside News
- Wikipedia: California Fair Plan
- Los Angeles Times
- Google Search: California homeowner insurance rate hike
- San Francisco Chronicle
- Encyclopedia Britannica: California wildfires
- Insurance Business Magazine
- Google News: California FAIR Plan
Author: STAFF HERE COSTA MESA WRITER
COSTA MESA STAFF WRITER The COSTA MESA STAFF WRITER represents the experienced team at HERECostaMesa.com, your go-to source for actionable local news and information in Costa Mesa, Orange 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 OC Fair, Concerts in the Park, and Fish Fry. Our coverage extends to key organizations like the Costa Mesa Chamber of Commerce and Boys & Girls Clubs of Central Orange Coast, plus leading businesses in retail, fashion, and technology that power the local economy such as Vans, Experian, and South Coast Plaza. As part of the broader HERE network, including HEREAnaheim.com, HEREBeverlyHills.com, HERECoronado.com, HEREHollywood.com, HEREHuntingtonBeach.com, HERELongBeach.com, HERELosAngeles.com, HEREMissionViejo.com, HERESanDiego.com, and HERESantaAna.com, we provide comprehensive, credible insights into California's dynamic landscape.
