California FAIR Plan Premium Increases Jan 2026

California FAIR plan premium increases Jan 2026: Many California homeowners are bracing for steep California FAIR Plan premium increases heading into 2026. If you rely on the FAIR Plan because no standard insurer will cover your property, you cannot afford to ignore what is coming.

What Is The California FAIR Plan?

• The California FAIR Plan is the state’s “insurer of last resort” for homes and businesses that can’t find coverage in the regular market, usually because they are in high wildfire‑risk areas. It is funded by a pool of private insurers, but it is not a government subsidy program or a discount option.

Key points about the FAIR Plan:

• It mainly offers basic fire and smoke coverage; you usually need a separate wraparound policy for liability, theft, and water damage.

• It is heavily concentrated in the riskiest wildfire zones, so its claims costs are high and volatile.

• Enrollment has surged as traditional insurers stopped writing or renewing many policies in high‑risk areas.

By late 2025, the FAIR Plan covered more than 646,000 homes, more than doubling its policy count compared with a few years earlier. Written premiums reached about 1.96 billion dollars as of December 2025, up more than 200 percent since 2022.

California FAIR Plan Premium Increases In 2026

• The headline everyone is worried about is the proposed average 35.8 percent rate increase. The FAIR Plan filed this requested hike with the California Department of Insurance as wildfire losses and overall exposure exploded.

Key details of the proposed increases:

• Average statewide FAIR Plan premium hike: 35.8 percent for residential fire coverage.

• Timing: If approved as filed, new rates would start phasing in for renewals after about April 1, 2026.​

• Not everyone sees 35.8 percent; actual changes depend on your ZIP code, wildfire risk score, and property details.

Local examples show how uneven this can be. In Santa Cruz County, one ZIP code is projected to see roughly a 9 percent increase, while another ZIP code could face hikes of more than 50 percent. Some modeling suggests certain homeowners could even see increases above 300 percent, while a minority might see lower rates if their risk profile improves.

This would be the first major FAIR Plan increase based on modern wildfire catastrophe models, rather than just past loss history. Regulators have allowed the use of advanced models under a broader “Sustainable Insurance Strategy” that also requires insurers to stay active in higher‑risk areas if they want to use these tools.

Why Are California FAIR Plan Premiums Rising?

There is no single culprit. Instead, several forces are pushing FAIR Plan premiums higher at the same time.

Main drivers include:

• Wildfire losses and risk: Climate‑driven megafires have produced extreme losses, and the FAIR Plan insures a dense cluster of homes in the most dangerous zones.

• Rapid enrollment growth: The plan added more than 21,000 policies between September and December 2025 alone, and total exposure on residential properties is in the hundreds of billions of dollars.

• Reinsurance and cost of capital: Insuring high‑risk wildfire areas requires costly reinsurance and larger reserves, which feeds back into premiums.

• Market pullback by traditional insurers: As big carriers paused new business or non‑renewed high‑risk homes, the FAIR Plan became a pressure valve, taking on more risk than it was designed to hold.

Regulators say the goal is not simply to raise prices but to stabilize the market and eventually move people off the FAIR Plan and back into standard policies. At the same time, consumer advocates argue that large hikes will be punishing for homeowners who already have no alternative.

What This Means For Homeowners In 2026,California FAIR plan premium increases Jan 2026

If you have a FAIR Plan policy coming up for renewal after early 2026, you should prepare for a sizable rate shock. While the exact number will depend on your property and ZIP code, many homeowners will be looking at double‑digit percentage increases.

Here is what that could look like in plain numbers:

• A 3,500 dollar annual FAIR Plan premium could jump to roughly 4,750 dollars at a 35.8 percent increase.

• Some higher‑risk ZIP codes could see effective hikes of 40–50 percent or more, which would push a 5,000 dollar policy toward 7,000–7,500 dollars.

• In a small slice of extreme‑risk situations, homeowners might see even larger jumps if their property scores very poorly on new wildfire risk models.

At the same time, a few homeowners in comparatively lower‑risk pockets may see smaller increases or even modest decreases if models show improved conditions. But given the overall loss environment, most FAIR Plan customers should assume their 2026 bill will be meaningfully higher.

How To Lower The Impact Of FAIR Plan Increases, California FAIR plan premium increases Jan 2026

You cannot control statewide rate filings, but you can take practical steps to soften the blow of California FAIR Plan premium increases in 2026.

Practical moves to consider:

• Shop aggressively for a standard policy: Some insurers are slowly returning to writing in higher‑risk ZIP codes under new state rules, especially as part of the Sustainable Insurance Strategy. Even if you are turned down by some carriers, it only takes one “yes” to replace your FAIR Plan policy.

• Work with an experienced independent agent or broker: An agent who specializes in wildfire‑exposed areas will know which carriers are selectively writing and how to present your home in the best light.

• Invest in wildfire mitigation: Clearing defensible space, hardening your roof and vents, upgrading windows, and installing ember‑resistant features can reduce your individual risk score and may qualify you for credits under new rules.

• Combine FAIR Plan with a leaner wrap policy: Make sure you are not over‑insuring or duplicating coverage across policies, especially for contents and liability limits you may not need at very high levels.

• Reevaluate coverage limits and deductibles: Increasing your deductible or aligning your coverage more closely to realistic rebuilding costs (instead of outdated estimates) can help offset some of the increase.

If your new premium feels unmanageable, do not just let your policy lapse. A coverage gap can make securing a replacement policy even harder, and if you have a mortgage, your lender can force‑place a far more expensive policy.

FAQs About California FAIR Plan Premium Increases Jan 2026

1. How much will California FAIR Plan premiums increase in 2026?

The plan is seeking an average statewide residential premium increase of about 35.8 percent, with actual changes varying by location and risk level.

2. When do the new FAIR Plan rates start?

If regulators approve the filing, the new rates would generally apply to policy renewals after around April 1, 2026, though the exact effective date can vary by filing details.​

3. Will every homeowner see a 35.8 percent increase?

No. The 35.8 percent figure is an average across the entire FAIR Plan book of business. Your actual change depends on your ZIP code, wildfire risk profile, and specific property characteristics.

4. Why is the FAIR Plan raising premiums so much?

The FAIR Plan is heavily concentrated in wildfire‑exposed areas and has seen rapid enrollment growth, rising reinsurance costs, and large loss payouts. New catastrophe models now allowed by regulators are also reshaping how risk is priced.

5. Can I avoid the FAIR Plan by switching to a regular insurer?

In some areas, yes. Under the Sustainable Insurance Strategy, several insurers that received rate approvals have committed to writing more business in “distressed” areas. Working with a knowledgeable agent and documenting your mitigation efforts can improve your chances of qualifying.

6. What can I do right now to prepare for the 2026 increase?

Start by:

• Getting quotes from multiple carriers (including surplus lines if appropriate).

• Improving wildfire defenses around your home and keeping records of upgrades.

• Reviewing your coverage limits, deductibles, and wraparound policy to avoid over‑insuring.

7. Could these FAIR Plan increases be reduced or rejected?

The Department of Insurance can approve, modify, or reject the filing. Consumer groups are pressuring regulators to limit steep hikes, while the FAIR Plan argues that higher premiums are necessary to keep paying claims and maintain financial stability.

8. Are other California home insurers raising rates too?

Yes. Alongside the FAIR Plan’s requested hike, the Department of Insurance has already approved rate increases of around 6.9 percent on average for major carriers like Mercury and CSAA starting in 2026. Broader projections point to California home premiums rising roughly 20 percent or more between 2023 and the end of 2025, even before the full FAIR Plan increase takes hold.

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