California, October 10, 2025
News Summary
California homeowners may see a 35.8% increase in insurance rates as the FAIR Plan seeks approval following significant wildfire losses. This marks the largest adjustment since 2019, reflecting ongoing insurance market challenges. Homeowners could mitigate rate increases by adopting wildfire risk strategies. Governor Newsom has signed bills aimed at reforming the FAIR Plan amidst rising concerns over insurance affordability and claims handling related to smoke damage.
California homeowners could be facing a significant increase in their insurance rates, as the California FAIR Plan has formally requested an average rate hike of 35.8%. This proposal comes in the wake of an estimated $4 billion in losses incurred from wildfires in January 2025. Should this rate increase be approved, it would mark the largest adjustment since 2019 when rates rose by an average of 20.3%.
The rate hikes in previous years have reflected an escalating trend in the need for increased insurance premiums. In 2021 and 2023, the FAIR Plan implemented increases of 16% each year. A proposed 48.8% increase in 2023 was eventually reduced by the insurance commissioner after discussions about affordability and market conditions.
The California FAIR Plan is designed to act as an insurer of last resort, providing necessary coverage for homeowners who struggle to find insurance elsewhere. As private insurance companies withdraw from the market due to mounting losses, the FAIR Plan has taken on an increasing share of the homeowner insurance landscape.
The president of the FAIR Plan has stated that the necessity for adequate rates is crucial for the organization’s financial viability. This need has been exacerbated by substantial member carrier assessments totaling $1 billion to cover claims resulting from past disasters.
The impact of the proposed 35.8% rate increase will differ based on individual property risk and specific geographic locations. Those properties deemed at higher risk for wildfires could see even steeper hikes. However, homeowners may be able to lower their premiums by up to 15% if they implement wildfire risk mitigation strategies on their properties, which include measures such as creating defensible space or using fire-resistant building materials.
In response to the growing concerns regarding insurance availability and affordability, California Governor Gavin Newsom recently signed five bills intended to reform and improve the FAIR Plan. These legislative actions aim to establish new financing methods and enhance oversight of the plan to address concerns stemming from recent wildfires.
Amid these discussions, concerns regarding smoke damage claims from the January wildfires have surfaced, leading to various legal challenges against the FAIR Plan. Homeowners have raised complaints about the handling of their claims, which prompted lawsuits alleging mishandling of these claims regarding smoke damage. In a notable ruling, a Superior Court judge found that the FAIR Plan’s policy on smoke damage violated state law, based on the evidence that the FAIR Plan’s procedures for testing and remediation were insufficient.
The California Department of Insurance is currently reviewing the rate increase request, which must receive approval before it can be put into effect. Consumer advocacy organizations are actively seeking protections for homeowners, urging that the proposed rate increase be paused until the ongoing issues with smoke damage claims are adequately resolved.
Frequently Asked Questions
What is the California FAIR Plan?
The California FAIR Plan is designed to provide insurance for homeowners who cannot find coverage elsewhere.
What rate increase has the California FAIR Plan proposed?
The California FAIR Plan has requested an average insurance rate increase of 35.8%.
Why is the FAIR Plan seeking such a large increase?
This proposed increase comes after the plan incurred approximately $4 billion in losses due to wildfires in January 2025.
How will the increase vary for homeowners?
The average 35.8% increase will vary by location and individual property risk, with some more prone to wildfires facing steeper hikes.
Are there discounts available for homeowners?
Homeowners can receive discounts of up to 15% on their premiums if they implement wildfire risk mitigation strategies on their properties.
Deeper Dive: News & Info About This Topic
- CBS News: Bay Area Community Will Have to Use California Fair Plan as Rate Hike Looms
- Wikipedia: California FAIR Plan
- LA Times: California’s Home Insurer of Last Resort Seeks 36% Rate Hike Following January Fires
- Google Search: CALIFORNIA FAIR PLAN insurance
- Housing Wire: California FAIR Plan Seeks Insurance Premium Increase
- Encyclopedia Britannica: Homeowners Insurance
- SF Chronicle: FAIR Plan Insurance Rate Increase
- Google News: California insurance rate hikes
Author: STAFF HERE HUNTINGTON BEACH
The Huntington Beach Staff Writer represents the experienced team at HEREHuntingtonBeach.com, your go-to source for actionable local news and information in Huntington Beach, 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 the Huntington Beach Surf City USA Marathon, the U.S. Open of Surfing, Fourth of July celebrations at the Huntington Beach Pier, and community festivals at Huntington Beach Central Park. Our coverage extends to key organizations like the Huntington Beach Chamber of Commerce and Visit Huntington Beach, plus leading businesses in retail, hospitality, and outdoor recreation that drive the local economy. As part of the broader HERE network, including HEREAnaheim.com, HERECostaMesa.com, HERESantaAna.com, and HERELosAngeles.com, we provide comprehensive, credible insights into Southern California's dynamic landscape.
