California’s FAIR Plan, the state’s home insurance of last resort, will raise rates by 29.1% starting October 15, 2026.
The increase will primarily affect homeowners in high-risk, fire-prone areas. This decision comes as many Californians struggle to find coverage in the standard market, pushing them towards the FAIR Plan, which is backed by six standard insurance companies for wildfire damage only.
Initially, the FAIR Plan sought a 35.8% rate hike to avoid financial instability, according to Michael Soller, a spokesman for the state’s Department of Insurance. The FAIR Plan has seen a significant enrollment increase, with a 43% jump between September 2024 and December 2025, following catastrophic wildfires.
The Terner Center at UC Berkeley highlights that escalating climate risks and insurer pullbacks have left many Californians with limited options, increasing reliance on the FAIR Plan. The California Department of Insurance is now allowing insurers to incorporate climate risk into pricing models, potentially leading to further rate hikes.
Efforts to stabilize the market include faster rate reviews and new legislative mandates. For instance, a proposed bill would require insurers to offer coverage in high-risk areas if homeowners implement fire-hardening measures. Another proposal aims to expand the FAIR Plan to offer comprehensive coverage, beyond just fire insurance.
Industry experts warn that without addressing pricing, the FAIR Plan’s expansion could entrench its role as a primary insurer, rather than a temporary solution. The market remains fragile, with ongoing efforts needed to encourage private insurers to return and provide coverage in high-risk regions.
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