California FAIR Plan Swells as 29% Rate Hike and Surcharges Hit

A last-resort insurer becoming a mainstream one

California's FAIR Plan was designed as a backstop for properties the private market won't insure. It increasingly looks like a core part of the state's homeowners insurance system, and it is getting more expensive.

The plan's 29.1% rate increase takes effect October 15, according to the California Department of Insurance. That is below the 35.8% the plan originally requested, but it is still a steep jump for policyholders who often had nowhere else to go 1.

The growth figures explain why regulators approved it. FAIR Plan enrollment rose 43% between September 2024 and December 2025, with the January 2025 Los Angeles wildfires driving much of that surge 1. Over a longer window, residential policies climbed from roughly 236,500 in September 2021 to about 665,900 by June 2026. That is close to a threefold increase, or average annual policy growth of 24.3% 2.

Exposure has grown faster than policy counts. Exposure is the total value the plan would owe if every insured property were destroyed. One analysis puts it at about $709 billion, up from $156 billion, or growth of 37.6% a year 2. Data compiled by Amwins put total exposure at $750 billion as of March, a 242% increase since September 2022 1.

The gap between those two estimates likely reflects different datasets and definitions rather than a contradiction. Both point to a liability base that is expanding much faster than the number of homes it covers.

Not just a high-fire-zone story

The common assumption is that the FAIR Plan grows mainly in canyon and foothill communities. Concentration there is real. In the highest-risk ZIP codes, about 41% of residential structures carry a FAIR Plan policy, compared with 4% in lower-risk areas 1. Research from the California Policy Lab found dozens of high-hazard areas where FAIR Plan policies make up more than half of all residential coverage 4.

The most recent data, however, show the plan expanding fastest in areas that state regulations do not classify as "distressed" 2. In practice, private insurers' retreat is no longer confined to the places most obviously exposed to wildfire. Coverage is shifting onto the state-created pool even in communities that regulators consider less troubled.

The demographics of heavy-FAIR areas are also more varied than the stereotype suggests. High-risk, high-concentration communities tend to be older, less racially diverse and more owner-occupied than California overall 4. Income levels differ by concentration. Areas where the FAIR Plan holds 50% to 75% of policies are less affluent than the state average. Areas above 75% match or exceed statewide income and education levels 4.

Who pays when the backstop runs short

The financial plumbing is drawing more scrutiny. The FAIR Plan is backed and run by the state's licensed insurers. After the L.A. fires produced around $4 billion in claims, it needed a $1 billion assessment from those member carriers 3.

Under a 2024 arrangement negotiated by Insurance Commissioner Ricardo Lara, insurers can recover up to half of the first $1 billion of an assessment through a temporary statewide surcharge on their own residential customers. They can recover all of any amount above $1 billion 34.

That structure means homeowners who have never touched the FAIR Plan can still help pay for its losses. A Los Angeles County Superior Court judge has now ruled the surcharges legal, clearing insurers to pass on part of the bailout cost 3.

The broader fight over wildfire costs is still open. Lawmakers are considering how those costs should be divided among utilities, insurers and policyholders, and the dispute remained unresolved at the end of the legislative session 1.

Part of a national pattern

California's problems are an extreme version of a nationwide trend. NAIC data show Utah had the country's highest nonrenewal rate in 2025 at 4.5%, with California close behind 5. The Treasury's Federal Insurance Office found nonrenewals rose nearly 30% from 2018 to 2022 and run 80% higher in the riskiest ZIP codes, where premiums average 82% above low-risk areas 5. Roughly 14% of U.S. homes now carry no insurance at all 5.

The takeaway

The FAIR Plan is no longer a narrow safety net for a few wildfire-prone enclaves. It has become a large, fast-growing insurer whose costs reach well beyond its own policyholders, through rate hikes and court-approved surcharges.

The rate increase may help stabilize the plan's finances. It does not address the underlying problem, which is that private carriers keep pulling back, now including areas outside the official danger zones. Until the state settles who bears wildfire risk, and private insurers find terms that bring them back, more Californians are likely to end up in the FAIR Plan and pay more for less coverage.