California FAIR Plan seeks insurance premium hike of nearly 36%

Homeowners in California might be facing a steep increase in their insurance costs. The California FAIR Plan, the state’s insurer of last resort, is seeking an average rate hike of 35.8%. If granted, this would be the largest hike recorded by the FAIR Plan in several years. 

This proposed rate hike would be the largest increase since 2019, when rates rose by an average of 20.3%. In 2021 and 2023, rates went up by 16% in each year, although 2023’s hike was cut down by California insurance commissioner Ricardo Lara, as the FAIR Plan originally sought a 48.8% rate increase. 

“By statute, FAIR Plan rates must be sufficient to pay anticipated claims and expenses,” FAIR Plan spokesperson Hilary McLean said in a statement. “The FAIR Plan is working closely with the California Department of Insurance to ensure its rates reflect the current risk portfolio, expenses and growth as the state’s insurer of last resort.”

The request came after the FAIR plan incurred billions of dollars in losses due to the wildfires that plagued the state in January 2025. In total, estimated losses from the January wildfires came in near $4 billion, which is prompting the FAIR Plan to assess an additional $1 billion to its member carriers that would enable it to pay all of the claims. 

If granted by the state’s insurance commissioner, the new rates would apply in April 2026. While the average rate hike is projected to be 35.8%, the exact rate change would differ by property, depending on its location and wildfire risk. Additionally, homeowners can apply for discounts of up to 15% if they undertake wildfire risk mitigation efforts on their property. 

The FAIR Plan is currently facing additional scrutiny from the state after several homeowners filed lawsuits. They allege that insurers have refused to properly test and remediate homes that were infiltrated by smoke, soot and ash during the January fires. The suits resulted in a Superior Court judge ruling in June that the FAIR plan’s smoke damage policy violated state laws.