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The FAIR Plan, California’s insurer of last resort and one of the state’s largest insurance companies, will substantially hike rates in October.<\/p>\n
Stephen Lam\/S.F. Chronicle<\/p>\n
Starting in October, customers on the California FAIR Plan will get hit with the insurer\u2019s largest rate hike in years<\/a>.<\/p>\n Premiums will rise<\/a> overall by just under 30% for the FAIR Plan\u2019s nearly 663,000 residential policyholders<\/a>.<\/p>\n But the exact number varies depending on a homeowner\u2019s specific situation. About half of all customers will see their rates increase between 30% to 50%. A quarter of customers will see their rates decrease\u00a0\u2014 by amounts up to 80%. The remaining quarter will see rate hikes below 30% or between 50% and 200%.<\/p>\n Article continues below this ad<\/p>\n Policyholders can expect to see their new premium at their first renewal date following Oct. 15.<\/p>\n Among the hardest-hit ZIP codes is the community of Grizzly Flats in the Sierra Nevada foothills, where nearly 150 customers will go from paying an average of $2,671 a year to $5,485. In the 94563 ZIP code covering the East Bay city\u00a0Orinda, rates are set to rise by an average of 31%, bringing the average premium in the community up to just under $7,000.<\/p>\n San Francisco Chronicle Logo<\/p>\n Make us a Preferred Source to get more of our news when you search.<\/p>\n <\/p>\n Add Preferred Source<\/p>\n <\/a><\/p>\n In San Francisco, most policyholders are slated to see rates go down.<\/p>\n Article continues below this ad<\/p>\n \u201cThe largest component of the increase relates to the wildfire portion of policyholders\u2019 premiums, so those policyholders whose properties are at significant wildfire risk will see a higher increase than those at lower risk, and some policyholders will see a premium decrease,\u201d a spokesperson for the FAIR Plan said.\u00a0<\/p>\n This is the first statewide rate increase for the FAIR Plan since 2023, when it raised premiums by 15.7% overall. The FAIR Plan is required to submit an updated rate filing at least every two years, according to the spokesperson.<\/p>\n Since its last increase, California\u2019s insurance crisis has driven the FAIR Plan\u2019s residential policy count to double. Data shows it\u2019s continued to grow over the past year, but the pace has slowed significantly. Insurance Commissioner Ricardo Lara recently told state lawmakers that the trend was a promising sign of California\u2019s insurance market beginning to improve.<\/p>\n The FAIR Plan is California\u2019s state-created but privately-run insurer of last resort. It now insures more homes than all but a few of the largest insurers in the state, but only covers damage from fire. To be protected against water leaks, liability claims and more, customers are required to purchase a second policy from a different insurer. Policyholders are only supposed to turn to the FAIR Plan if they\u2019re incapable of getting a policy from the private market.<\/p>\n The FAIR Plan\u2019s growth over the past few years, especially in some of the most wildfire-prone parts of the state, stretched it thin\u00a0\u2014 to the point at which it ran out of money to pay claims from the 2025 Eaton and Palisades wildfires.<\/p>\n Article continues below this ad<\/p>\n State statute required private insurers to help cover the difference<\/a> to the tune of $1 billion, half of which is currently being passed down on to those insurers\u2019 customers.<\/p>\n Even before the Los Angeles County wildfires, FAIR Plan President Victoria Roach had been warning<\/a> that the insurer would need a substantial rate increase to handle its growth and prepare for the possibility of a major wildfire.<\/p>\n When the FAIR Plan first submitted its request last October, it asked regulators to approve an increase just under 36%. At the time, the insurer said it would have sought an 80% increase if not for recent reforms by the Department of Insurance known as the\u00a0Sustainable Insurance Strategy<\/a>.<\/p>\n These reforms allow the FAIR Plan and other insurers to price wildfire risk based on forward-looking risk models that take into account potentially worsening fires, rather than historical data, and to charge customers part of their cost of reinsurance\u00a0\u2014 insurance for insurance companies.<\/p>\n Article continues below this ad<\/p>\n Several other major insurers have been approved for increases under these reforms. They include Farmers Insurance Group<\/a>, Mercury Insurance<\/a>, CSAA and others.<\/p>\n