The California FAIR Plan rate hike proposal could soon increase insurance costs for hundreds of thousands of homeowners statewide. The state’s insurer of last resort has asked regulators to approve an average 35.8 percent rate increase beginning next spring, marking its largest requested jump in more than seven years.
Sharp Increase Proposed for 2025
The California FAIR Plan rate hike request, filed with the California Department of Insurance, reflects escalating wildfire risk, reinsurance costs, and the growing number of properties covered under the plan. The FAIR Plan offers basic fire coverage to homeowners unable to secure private insurance, particularly in high-risk fire zones across California.
If approved, the average increase would surpass the 20.3 percent hike approved in 2019 and the nearly 16 percent increases in 2021 and 2023. About half of all FAIR Plan policyholders would see rates rise between 40 and 55 percent, while some could experience small decreases depending on location and property type.
FAIR Plan Growth Raises Concerns
The FAIR Plan now covers roughly 591,000 policies, nearly double its total from five years ago, as private insurers continue to retreat from fire-prone areas. In Los Angeles County, especially in foothill communities such as Arcadia, Duarte, and Monrovia, many homeowners have turned to the FAIR Plan as their only available option for coverage.
Housing advocates warn that the proposed California FAIR Plan rate hike could add to California’s growing affordability crisis. Higher insurance premiums could increase monthly housing costs and make it harder for families to qualify for home loans, particularly in older or high-risk neighborhoods.
Regulators Reviewing the Request
Insurance Commissioner Ricardo Lara is reviewing the rate filing, which will undergo an actuarial review and public comment period. Lara has previously reduced or delayed similar requests to balance consumer protection with the FAIR Plan’s financial solvency.
In a statement, the Department of Insurance said it will “carefully evaluate the FAIR Plan’s filing to ensure that any approved rate changes are actuarially sound and in compliance with state law.”
Impact on Homeowners and Buyers
Real estate agents say the increase could ripple through the state’s housing market. In the San Gabriel Valley, where hillside homes are at greater wildfire risk, the rate hike could discourage new buyers or reduce home values if affordability worsens.
The proposal highlights California’s growing struggle to balance climate risk, insurance availability, and housing access. As private insurers pull back, the FAIR Plan’s expanding role underscores the need for long-term reform to stabilize the state’s insurance market while protecting homeowners.
For details on the proposal and updates on regulatory review, visit the California Association of Realtors at www.car.org.
