California, October 12, 2025
News Summary
California homeowners may see a staggering insurance rate increase of 35.8% starting April 1, 2026, due to the California FAIR Plan’s proposal. This record hike is a response to nearly $4 billion in wildfire-related claims and follows multiple previous increases. The decision reflects growing wildfire risks affecting approximately 591,000 policyholders, with many facing hikes of 40% to over 300%. Critics are calling for reform amidst complications regarding smoke-damage claims. The California Department of Insurance is reviewing the situation, leaving many homeowners concerned about their coverage options.
California homeowners may face a significant increase in their insurance rates as the California FAIR Plan proposes a record average rate hike of 35.8%. This increase, which would be effective starting April 1, 2026, is pending approval from the California Department of Insurance and marks the largest rate adjustment in at least seven years. This decision comes on the heels of substantial financial losses totaling nearly $4 billion due to wildfire-related claims following severe firestorms in January.
The California FAIR Plan, established as a high-risk insurance pool for homeowners unable to secure coverage from traditional insurers, has experienced multiple rate hikes in recent years, with increases of 20.3% in 2019 and nearly 16% in 2021 and 2023. The current proposal’s scale reflects escalating risks associated with wildfires, prompting heightened scrutiny and concern among policyholders.
This proposed rate increase will have varied effects on policyholders. Approximately 50% of the homeowners insured by the FAIR Plan can expect increases ranging from 40% to 55%. Some might see their rates more than triple, with four policyholders anticipating increases exceeding 300%. Conversely, certain homeowners could receive discounts of up to 15% if they take measures to reduce fire risk.
The number of policyholders enrolled in the FAIR Plan has seen a surge, more than doubling since 2021, reaching approximately 591,000 this summer. This influx is attributed to private insurers withdrawing from the market due to rising wildfire risks, leaving many homeowners with no alternative but to turn to the FAIR Plan. However, many customers report that switching to this plan results in premiums that are double or more than previous private market rates, with average costs soaring to around $3,200 annually—over twice that of typical homeowner policies. It is important to note that the FAIR Plan exclusively covers fire damage, thus requiring additional policies to address liability and other risks.
Further complicating matters, the FAIR Plan’s handling of smoke-damage claims from the January wildfires has drawn sharp criticism. Many affected homeowners have expressed frustration, leading to legal challenges against the FAIR Plan. A Superior Court judge ruled that the FAIR Plan’s approach to smoke damage was unlawful, triggering a cease-and-desist order from state regulators. In response, California Governor Gavin Newsom condemned the FAIR Plan’s claims handling as “unscrupulous and unfair,” amplifying calls for reform and accountability.
The California Department of Insurance is currently reviewing the FAIR Plan’s practices related to smoke-damage claims, with potential fines looming if found in violation of regulations. The FAIR Plan defends the necessity of its proposed rate increase as essential to cover anticipated claims and ongoing expenses while accounting for the changing landscape of wildfire risks.
Recently updated insurance guidelines allow for the inclusion of wildfire catastrophe models and reinsurance costs in rate calculations, adjusting rates to reflect future risks accurately. In contrast, other insurers operating within California, such as Mercury and CSAA, have requested more modest rate increases around 6.9%, committing to maintaining their presence in the state.
Consumer advocacy groups are calling for a thorough review of the proposed rate increase by the FAIR Plan, urging a halt on any adjustments until the smoke-damage claims review is fully completed.
FAQ
What is the average rate increase proposed by 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.
Why is the rate increase being proposed?
The proposed increase follows billions of dollars in losses from the January firestorms, prompting the FAIR Plan to adjust rates to cover anticipated claims and expenses.
How many policyholders could see their rates increase significantly?
Approximately 50% of policyholders may see increases between 40% and 55%, with some experiencing increases exceeding 300%.
How many policyholders does the FAIR Plan currently have?
The number of FAIR Plan policyholders has more than doubled since 2021, reaching 591,000 as of this summer.
What do consumer advocacy groups want regarding the rate increase?
Consumer advocacy groups are pushing for a thorough review of the FAIR Plan’s rate change request and have urged a freeze on any increase until the smoke damage claims review is completed.
Key Features of the California FAIR Plan Rate Increase Proposal
| Feature | Details |
|---|---|
| Proposed Rate Increase | 35.8% |
| Effective Date | April 1, 2026 |
| Recent Losses | Estimated at $4 billion |
| Number of Policyholders | 591,000 |
| Rate Increase History | 20.3% in 2019, 16% in 2021, 16% in 2023 |
| Potential Rate Changes for Policyholders | 40% to 55% for 50%, up to 300% for some |
| Annual Cost | $3,200 (average) |
Deeper Dive: News & Info About This Topic
- Coastside News: FAIR Plan Rate Increase Impact
- Los Angeles Times: Home Insurer Seeks Rate Hike
- San Francisco Chronicle: FAIR Plan Insurance Rate
- Insurance Business: FAIR Plan Files for Rate Hike
- Daily Bulletin: California FAIR Plan Rate Hike
- Wikipedia: California
- Google Search: California FAIR Plan
- Google Scholar: California FAIR Plan
- Encyclopedia Britannica: California
- Google News: California FAIR Plan
Author: STAFF HERE LOS ANGELES WRITER
LOS ANGELES STAFF WRITER The LOS ANGELES STAFF WRITER represents the experienced team at HERELosAngeles.com, your go-to source for actionable local news and information in Los Angeles, Los Angeles County, and beyond, specializing in "news you can use" with coverage of 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 from years of dedicated reporting and strong community input, including local press releases and business updates, while delivering top reporting on high-value events like the Academy Awards, LA Auto Show, and Los Angeles Marathon, extending coverage to key organizations such as the Los Angeles Area Chamber of Commerce and the Los Angeles Tourism & Convention Board, plus leading businesses in entertainment and technology like Warner Bros. and SpaceX, and as part of the broader HERE network including HEREAnaheim.com , HERECostaMesa.com , HEREHuntingtonBeach.com , and HERESantaAna.com , providing comprehensive, credible insights into Southern California's dynamic landscape. HERE Anaheim HERE Beverly Hills HERE Coronado HERE Costa Mesa HERE Hollywood HERE Huntington Beach HERE Long Beach HERE Los Angeles HERE Mission Viejo HERE San Diego HERE Santa Ana
