California, October 12, 2025

News Summary

The California FAIR Plan is set to propose an unprecedented 35.8% average increase in homeowners insurance rates, effective April 1, 2026. This significant rise is attributed to substantial losses from recent wildfires, amounting to around $4 billion. With policyholder numbers surging to 591,000, critics are voicing concerns about the implications of such hikes, especially amidst ongoing legal scrutiny over the plan’s claims processing. Regulatory investigations are underway, highlighting issues related to smoke damage claims from January’s firestorms.

California

The California FAIR Plan is proposing a record average rate increase of 35.8% for homeowners insurance, set to take effect on April 1, 2026, pending approval from the California Department of Insurance. This increase, the largest in at least seven years, is a response to billions of dollars in losses incurred due to the January firestorms.

Based in Los Angeles, the FAIR Plan operates as a state-created high-risk insurance pool for homeowners unable to find coverage in the private market. In recent years, the plan has seen prior rate hikes of 20.3% in 2019 and nearly 16% in both 2021 and 2023. The FAIR Plan estimates losses of around $4 billion from the most recent wildfires, necessitating an assessment of $1 billion from its member carriers to cover claims.

Policyholders may experience uneven impacts from the proposed rate increases. Approximately half of the policyholders could see increases ranging between 40% and 55%, while some may experience even greater hikes, with four individuals potentially facing increases exceeding 300%. Conversely, discounts of up to 15% are available for homeowners who take steps to reduce fire risks.

The number of policyholders in the FAIR Plan has surged to 591,000 as of this summer, more than doubling since 2021. This increase is attributed to many insurers withdrawing from the market amid rising wildfire risks. Homeowners switching to the FAIR Plan often report that their costs have doubled or more compared to earlier rates with private insurers, resulting in an average annual cost of $3,200, which is more than twice that of a standard policy.

It is important to note that the FAIR Plan covers only fire damage; homeowners are required to purchase additional policies for liability and other risks. The proposed rate increase has drawn criticism, particularly focusing on how the FAIR Plan has managed smoke-damage claims from the January fires. Several homeowners have filed complaints, leading to legal action against the plan.

A recent ruling from a Superior Court judge deemed the FAIR Plan‘s handling of smoke damage claims as unlawful, prompting state regulators to issue a cease-and-desist order. Governor Gavin Newsom has expressed disapproval over the FAIR Plan‘s claims processing, labeling it “unscrupulous and unfair.” In response to these issues, the California Department of Insurance is investigating the FAIR Plan for its smoke-damage claims practices and may impose fines.

The FAIR Plan argues that the proposed rate hike is necessary to accommodate anticipated claims and operational expenses while accurately reflecting current wildfire risks. Recent changes in insurance guidelines permit the inclusion of wildfire catastrophe models and reinsurance costs in rate calculations, allowing for a more accurate reflection of future conditions.

In contrast, other insurers like Mercury and CSAA have sought smaller rate increases of 6.9%, while committing to maintaining their presence in California. Consumer advocacy groups are advocating for a thorough evaluation of the FAIR Plan‘s rate change requests, urging a halt to any increases until the review of smoke-damage claims is concluded.

Key Features of Proposed Rate Increase

FAQ

Deeper Dive: News & Info About This Topic

• Coastside News
• San Francisco Chronicle
• Los Angeles Times
• Wikipedia: Home Insurance
• Insurance Business Magazine
• Encyclopedia Britannica: California
• HousingWire
• Google Search: California FAIR Plan insurance
• CBS News
• Google News: California FAIR Plan

Author: STAFF HERE MISSION VIEJO WRITER

MISSION VIEJO STAFF WRITER The MISSION VIEJO STAFF WRITER represents the experienced team at HEREMissionViejo.com, your go-to source for actionable local news and information in Mission Viejo, 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 Oso Fit 5K Fun Run and Community Health Fair, Walk Against Drugs & Community Fair, and National Night Out. Our coverage extends to key organizations like the Mission Viejo Chamber of Commerce and Providence Mission Hospital Mission Viejo, plus leading businesses in retail and education that power the local economy such as The Shops at Mission Viejo, Capistrano Unified School District, and Amazon Delivery Station. As part of the broader HERE network, including HEREAnaheim.com, HEREBeverlyHills.com, HERECostaMesa.com, HERECoronado.com, HEREHollywood.com, HEREHuntingtonBeach.com, HERELongBeach.com, HERELosAngeles.com, HERESanDiego.com, and HERESantaAna.com, we provide comprehensive, credible insights into California's dynamic landscape.