California, October 12, 2025
News Summary
California homeowners insurance is facing a potential average rate increase of 35.8% through the California FAIR Plan, taking effect on April 1, 2026, if approved. This would mark the largest rate hike in seven years, primarily due to $4 billion in losses from recent wildfires. The increase is expected to disproportionately affect policyholders, with some facing hikes of over 300%. As the number of policyholders under the FAIR Plan rises, consumer advocacy groups are urging a review of the proposed changes amidst ongoing legal scrutiny of the plan’s claims process.
California is facing a proposed average rate increase of 35.8% for homeowners insurance through the California FAIR Plan, which could take effect on April 1, 2026, if approved by the California Department of Insurance. This is slated to be the largest hike in at least seven years, primarily due to billions of dollars in losses attributed to January firestorms.
The Los Angeles-based FAIR Plan, established to provide high-risk insurance coverage for homeowners, has previously encountered rate increases of 20.3% in 2019 and nearly 16% in both 2021 and 2023. The plan has currently reported approximately $4 billion in losses stemming from recent wildfires and has assessed its member carriers $1 billion to help cover these claims.
The anticipated rate hikes will not be evenly distributed across policyholders. It is estimated that roughly half could see increases between 40% and 55%. In certain instances, some policyholders might face staggering increases of over 300%. Conversely, there are reports that discounts of up to 15% could be available for homeowners taking fire risk reduction measures.
Since 2021, the number of policyholders under the FAIR Plan has surged, more than doubling to approximately 591,000 this summer. This rise is attributed to numerous private insurers withdrawing from the market due to heightened wildfire risks. Many homeowners switching to the FAIR Plan find themselves paying double or more compared to their prior private market insurance rates. The average annual cost under the FAIR Plan is reported to be around $3,200, surpassing twice the cost of standard insurance policies.
It’s important to note that the FAIR Plan only covers fire damage; additional policies are required for liability and other risks, which can further complicate homeowners’ financial burdens. The proposed rate increase has attracted criticism, particularly regarding the FAIR Plan’s handling of smoke-damage claims related to the January fires. This led to legal actions and widespread complaints from affected homeowners.
In June, a Superior Court judge ruled that the FAIR Plan’s smoke damage policy was in violation of state law, after which state regulators issued a cease-and-desist order. Governor Gavin Newsom has also condemned the FAIR Plan’s claims process as “unscrupulous and unfair.” The California Department of Insurance is currently investigating the FAIR Plan for its practices surrounding smoke-damage claims and may impose fines based on its findings.
The FAIR Plan defends its proposed rate increase by maintaining that it is essential to address anticipated claims and expenses while also reflecting the current wildfire risks. New insurance guidelines permitting the use of wildfire catastrophe models and reinsurance costs in rate calculations aim to create a more accurate assessment of future conditions.
While the FAIR Plan seeks a significant increase, other insurers, such as Mercury and CSAA, have requested smaller rate hikes of 6.9% and have pledged to remain active within the California insurance market. Meanwhile, consumer advocacy groups are advocating for a comprehensive review of the FAIR Plan’s rate change request. They are urging state regulators to freeze any potential increases until a review of smoke damage claims is conducted.
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, if approved by the California Department of Insurance.
When was the last major rate increase prior to this proposal?
The 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 under the FAIR Plan?
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 coverage does the FAIR Plan provide?
The FAIR Plan covers only fire damage, requiring additional policies for liability and other risks.
Key Features of the Proposed Rate Increase
Feature | Details |
---|---|
Proposed Rate Increase | Average of 35.8% |
Effective Date | April 1, 2026 |
Estimated Losses from Recent Wildfires | $4 billion |
Member Carrier Assessment | $1 billion |
Number of Policyholders | 591,000 |
Discount Potential | Up to 15% for fire risk reduction measures |
Previous Rate Increases | 20.3% in 2019; 16% in 2021 and 2023 |
Deeper Dive: News & Info About This Topic
- Coastside News: FAIR Plan Rate Increase
- Los Angeles Times: California Home Insurer Seeks Rate Hike
- San Francisco Chronicle: FAIR Plan Insurance Rate
- Insurance Business Magazine: FAIR Plan’s Largest Rate Hike
- Daily Bulletin: California FAIR Plan Rate Hike
- Wikipedia: Homeowners Insurance
- Google Search: California FAIR Plan Insurance
- Google Scholar: California Insurance Rate Hike
- Encyclopedia Britannica: Insurance
- Google News: California FAIR Plan

Author: STAFF HERE CORONADO
The Coronado Staff Writer represents the experienced team at HERECoronado.com, your go-to source for actionable local news and information in Coronado, San Diego 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 Coronado Island Film Festival, productions at Lamb’s Players Theatre, community workshops at John D. Spreckels Center, and iconic celebrations at Hotel del Coronado. Our coverage extends to key organizations like the Coronado Chamber of Commerce and Visit Coronado, plus leading businesses in hospitality, dining, and tourism that drive the local economy. As part of the broader HERE network, including HERESanDiego.com, HEREHuntingtonBeach.com, HERELongBeach.com, and HERELosAngeles.com, we provide comprehensive, credible insights into Southern California's dynamic landscape.