The California FAIR Plan – Our Only Option?
California’s insurance landscape has changed dramatically in recent years – maybe forever. While memorable slogans and jingles remain, such as “Like a Good Neighbor…is there,” insurance companies have cancelled policies or substantially raised premiums for homeowners’ fire coverage. Many companies have simply abandoned the market due to losses from catastrophic wildfires1.
The resulting lack of fire insurance options has led to a significant increase in the number of policies issued by the California FAIR (Fair Access to Insurance Requirements) Plan. As of March 2025, FAIR Plan policies in the state represent a 23% rise in the past six months and a 139% increase since September 2021. Annual increases in policies written in Tuolumne County generally have tracked those statewide but rose at a much lesser rate recently2.
What is the FAIR Plan?
Established by statute in 1968, the FAIR Plan is a syndicated fire insurance pool comprised of insurers (members) licensed by the state to conduct property/casualty business. The FAIR Plan issues policies on behalf of its member companies, who participate in profits, losses, and expenses of the Plan in direct proportion to their market share of business3. Regulations adopted in 2025 detail how the FAIR Plan can assess insurer members (and ultimately recoup costs from policyholders) when losses exceed reserves.
The FAIR Plan considers its service as a temporary safety net, but homeowners are turning to the pool as a last resort for basic dwelling policies and to meet mortgage lender requirements1. Unlike traditional homeowner insurance plans, the FAIR Plan covers losses caused only by fire, lightning, smoke, and internal explosion.
Residential properties that qualify for FAIR Plan coverage include owner-occupied dwellings, condominiums, seasonal and long-term rentals, and personal property contained therein. To protect against other perils, California homeowners may buy what is known as a Difference in Conditions policy from traditional insurance companies.
Insurance Commissioner Ricardo Lara encourages homeowners to maintain traditional homeowner insurance policies and provides online resources to that end4. However, the FAIR Plan is available to every homeowner as a last option for fire coverage. Available insurance broker and agent information can be found at https://www.cfpnet.com/.
Recent steps taken to attract insurers back to the California market
Since 2019, several initiatives have been staged to attract insurers back into writing fire coverage.
2019: FAIR Plan coverage limits for residential properties were doubled to $3 million to account for increased home values and building costs.
2022: The Safer from Wildfires framework requires insurers to consider community and property owners’ fire mitigation actions when differentiating risk and discounting insurance plans.
2023: FAIR Plan commercial property coverage limits were increased to $20 million per location ($100 million in 2025).
2024: “A Sustainable Insurance Strategy”5 was developed to guide decision-making and rule-making in balancing the needs of consumers and insurers and protecting communities from climate change impacts.
Other responsibilities of the CA Department of Insurance (CDI)
The CDI oversees insurer solvency to pay claims, sets standards for agents and broker licensing, performs market conduct reviews of insurance companies (to verify that insurers are operating as they promised), resolves consumer complaints, and investigates and prosecutes insurance fraud. The agency’s Consumer Services and Market Conduct Branch educates consumers, mediates consumer complaints, and enforces insurance laws. Its Enforcement Branch investigates criminal and regulatory violations, including fraud.
Take Action
To submit a complaint to the CDI, you or someone acting on your behalf must complete a “Request for Assistance RFA” form.
The CDI toll-free hotline number is 800-927-HELP (4357). If you believe you are a victim of insurance fraud or have information concerning suspected insurance fraud, contact the Fraud Division: 916-854-5760.
NOTES
- “Top 20 Largest California Wildfires,” California Department of Forestry and Fire Protection, October 2024.
- “5-year PIF Growth by County Through FY 2024,” California FAIR Plan, September 2024.
- “2021 CA Property & Casualty Market Share,” California Department of Insurance, April 30, 2022.
- “Top Ten Tips for Finding Residential Insurance,” California Department of Insurance.
- Overview of “California’s Sustainable Insurance Strategy,” California Department of Insurance, December 2024.