Homeowners’ Insurance Prices Could Skyrocket: Changes to the California FAIR Plan

The California FAIR (Fair Access to Insurance Requirements) Plan website explains its establishment in 1968 as a syndicate to provide fire insurance to California homeowners unable to find policies in the traditional insurance marketplace (1).

This syndicate is a pool of all the insurers licensed by the California Department of Insurance (CDI) to conduct property/casualty business in the state (2), administered by a board comprised of the syndicate’s member companies. While state law requires the California FAIR Plan to offer policies to any homeowner who needs one, it is not a governmental agency (3).

The syndicate structure of the FAIR Plan provides that Plan members share the profits, losses, and expenses of providing the policies in proportion to each member’s market share of the total of all FAIR Plan policies.

The California FAIR Plan issues policies to homeowners who can demonstrate that they have tried multiple times to obtain traditional insurance and been refused. The intention is to provide FAIR Plan fire insurance until traditional plans become available again. The question of attracting insurance companies back into the market as individual insurers is tied to their cost of doing business, weighing the corporate income against the likely value of claims against their policies.

One factor in this equation has been the restrictions that the CDI, headed by elected Insurance Commissioner Ricardo Lara, has placed on the modeling techniques insurance companies may use to assess fire risk. Until this year, the CDI limited allowable data to the history of catastrophic fires in a region. Under CDI’s recently approved guidelines, insurers are, for the first time, allowed to factor projected climate change risks into their pricing models.

Under these new models, insurance companies may be interested in returning to California. Still, it is expected that premium rates for both traditional policies and for FAIR Plan policies would skyrocket. Live Insurance News predicts that among FAIR Plan users, the vast majority can expect rate hikes up to 60 percent, a potential increase of $600 for every thousand dollars in premiums a homeowner is currently paying (4).

So, what do we do?

While we do not know the precise formula that any insurance company uses to calculate risk, their models are sensitive to any aspect that changes the risk of property damage due to fire. These include the quality and quantity of fire response resources available in our communities. Homeowners’ individual and collective efforts at protecting their property with home-hardening and alarm features are favorably regarded (5), as are community-wide fire mitigation practices, such as forming a Firewise Community (6).

About 70 percent of Tuolumne County is federal or state-managed forest land, which contributes to the risk of wildfires here. In a future article, we will consider some ideas about improving fire mitigation factors beyond the responsibility of private landowners and communities.

NOTES

1. “About the California FAIR Plan,” California FAIR Plan Property Insurance, 2026.
2. “Insuranceopedia Explains Syndicate,” Insuranceopedia, December 9, 2024.
3. Tonya Sissler, “California Fair Plan: What is it and what does it cover,” Insurance.com, April 22, 2025.
4. H. Cutner, “FAIR Plan Rate Shake-up Creates Geographic Winners and Losers Across California,” Live Insurance News, October 25, 2025.
5. David Monforton, “Do’s and Don’ts: The Factors That Affect Homeowners Insurance Premiums,” AAA Connect, November 11, 2024.
6. “Firewise USA,” Office of the State Firewise Marshal, November 11, 2024.
7. “Wildfire Home Hardening Grants in California: Free Money to Protect Your House?” EcoFlow, January 14, 2026.