California Homeowners Face Record Insurance Rate Hike

A house in California affected by wildfire showing insurance rate increase context.

California, October 12, 2025

News Summary

California is facing a significant homeowner’s insurance rate increase of 35.8% proposed by the FAIR Plan, effective April 1, 2026. This change follows billions in losses from recent wildfires and could result in varying impacts for policyholders. While some may see increases upwards of 300%, others could experience discounts. The FAIR Plan has seen a surge in policyholders due to available coverage limitations and dissatisfaction with private insurers. Governor Gavin Newsom has raised concerns about the management of claims, leading to an investigation into the plan’s practices.

California is facing a potential record rate increase for homeowners insurance as the California FAIR Plan proposes an average rise of 35.8%, set to take effect on April 1, 2026, pending approval from the California Department of Insurance. This proposed increase marks the largest hike in at least seven years, following billions of dollars in losses attributed to the devastating January firestorms.

The California FAIR Plan, established as a state-created high-risk insurance pool based in Los Angeles, has experienced prior rate hikes of 20.3% in 2019, and nearly 16% in both 2021 and 2023. The plan estimates approximately $4 billion in losses from recent wildfire incidents and has assessed member carriers $1 billion to help cover claims. However, the impact of the rate increases will not be uniform across policyholders; about half might see increases ranging from 40% to 55%, while some could even experience decreases of up to 78%.

Notably, the disparity in rate changes is considerable. For instance, four policyholders may face increases surpassing 300%, while others can qualify for discounts of up to 15% for implementing fire risk reduction measures. Since 2021, the number of policyholders under the FAIR Plan has surged more than twice, reaching 591,000 due to private insurers exiting the market in response to escalating wildfire risks. Many homeowners switching to the FAIR Plan report that their premiums often double or exceed previous rates from private insurers, with average combined costs around $3,200 per year—more than twice that of a standard policy.

However, the FAIR Plan offers limited coverage, extending only to fire damage. Homeowners must purchase additional policies to address liability and other risks. The proposed rate increase has garnered criticism, notably concerning the FAIR Plan’s management of smoke-damage claims from the January fires, prompting legal actions and complaints from affected homeowners. A recent Superior Court ruling stated that the FAIR Plan’s smoke damage policy was in violation of state law, leading regulators to issue a cease-and-desist order.

Governor Gavin Newsom has also expressed concerns regarding the FAIR Plan’s claims processing, describing it as “unscrupulous and unfair.” As a result, the California Department of Insurance has opened an investigation into the FAIR Plan’s practices related to smoke-damage claims, which may lead to fines against the organization.

In defense of the proposed rate increase, the FAIR Plan claims it is essential to cover anticipated claims and related expenses, as well as to align with existing wildfire risks. New insurance guidelines will allow the FAIR Plan to incorporate wildfire catastrophe models and reinsurance costs when calculating rates to give a more accurate representation of future conditions.

Other insurance providers, including Mercury and CSAA, have submitted requests for more modest rate increases of 6.9%, indicating their commitment to remaining active within the state of California. Meanwhile, consumer advocacy groups are urging a comprehensive review of the FAIR Plan’s rate increase request and are calling for a freeze on any increase until the investigation regarding smoke damage claims is concluded.

Key Information at a Glance

  • Proposed average rate increase: 35.8%
  • Effective date: April 1, 2026
  • Estimated losses from wildfires: $4 billion
  • Number of policyholders: 591,000
  • Average cost of FAIR Plan policy: $3,200
  • Comparison: FAIR Plan premium over 2 times that of standard policy

Frequently Asked Questions

What is the proposed average rate increase for the California FAIR Plan?

The proposed average rate increase is 35.8%.

When is the rate increase set to take effect?

The rate increase is set to take effect on April 1, 2026.

How much has the FAIR Plan estimated in losses from recent wildfires?

The FAIR Plan estimates approximately $4 billion in losses from recent wildfires.

How many policyholders does the FAIR Plan currently have?

The number of FAIR Plan policyholders has reached 591,000 as of this summer.

What is the average cost of a FAIR Plan policy?

The average combined cost of a FAIR Plan policy is approximately $3,200 per year, more than twice that of a standard policy.

Comparative Overview of Rate Changes

Year Rate Increase
2019 20.3%
2021 16%
2023 16%
2026 (Proposed) 35.8%

Deeper Dive: News & Info About This Topic

STAFF HERE SAN DIEGO WRITER
Author: STAFF HERE SAN DIEGO WRITER

SAN DIEGO STAFF WRITER The SAN DIEGO STAFF WRITER represents the experienced team at HERESanDiego.com, your go-to source for actionable local news and information in San Diego, San Diego 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 Comic-Con International, San Diego County Fair, and San Diego Pride Festival. Our coverage extends to key organizations like the San Diego Regional Chamber of Commerce and United Way of San Diego County, plus leading businesses in biotechnology, healthcare, and technology that power the local economy such as Qualcomm, Illumina, and Scripps Health. As part of the broader HERE network, including HEREAnaheim.com, HEREBeverlyHills.com, HERECostaMesa.com, HERECoronado.com, HEREHollywood.com, HEREHuntingtonBeach.com, HERELongBeach.com, HERELosAngeles.com, HEREMissionViejo.com, and HERESantaAna.com, we provide comprehensive, credible insights into California's dynamic landscape.

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