Keep in mind that the FAIR Plan is not a government program, but rather a shared market where licensed insurers are required by law to contribute to a risk pool. Insurers contribute based on their market share in California. This allows the FAIR Plan to offer coverage to those who might otherwise be unable to obtain it, even in high-risk areas. The Plan only includes basic coverage for fire, windstorm, hail, and vandalism.
To qualify for coverage under the Fair Plan property owners (1) must be unable to obtain private insurance for their property, (2) the property must be located in California and used as a primary residence (or at least 50% of the time), and (3) the structure must meet basic building codes and not have any pre-existing damage.
In 2025, the California FAIR Plan offers residential coverage up to $3 million per policyholder. The average sales prices for a single family home in San Mateo and Santa Clara Counties in May 2025 was approximately $2.5m. This means that there are potentially thousands of homes in the region that do not qualify for full coverage under the FAIR Plan.
The California FAIR Plan is facing a surge in policies and experiencing a strain on its operations, primarily due to the increasing number of homeowners seeking coverage after private insurers have either refused to write new policies or have cancelled existing ones in wildfire-prone areas. This has led to a significant increase in the number of FAIR Plan policies, from 202,987 in 2020 to 451,799 in 2024, more than doubling in just four years.
Already in 2022, a Department of Insurance audit found that the California FAIR Plan carried far less reinsurance than comparable plans in other states. Then due to the fires in Southern California, the plan was set to run out of funds by March 2025. As a result, it imposed a special charge of $1 billion on insurance companies, which will in turn pass the costs along to homeowners. Most California home and fire insurance customers will see temporary fees added to their insurance bills as part of the charge, known as an assessment, marking the first time insurance companies will have imposed an assessment directly on customers. The assessment will likely increase the average insurance premium by 20-25%. The assessment applies to most California homeowners, even those not insured with the FAIR Plan.
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