Guides
The California FAIR Plan explained
What the California FAIR Plan covers and leaves out, how to pair it with a DIC policy, how it is funded, and how to move back to a regular insurer.
The California FAIR Plan sells basic fire coverage to owners whom regular insurers will not cover. It is a dwelling fire policy, not a homeowners policy, so it does not include liability, theft or water damage, and most owners who rely on it also buy a separate difference in conditions (DIC) policy. It is meant as a bridge: the plan describes itself as temporary, and the state has built programs to move policyholders back to the regular market.
The California FAIR Plan profile has the plan's contact details and history. This guide is about how to use it well and what to check before you rely on it.
Who the plan is for
By law every insurer licensed to write basic property insurance in California is a member of the California FAIR Plan Association, which was created in 1968. It is not a state agency and receives no public money. You cannot buy from the plan directly; a licensed broker or agent registered with it submits your application. The plan requires that you have been unable to find coverage in the traditional market, and the broker must make a diligent search first.
It has grown quickly because private insurers restricted or left wildfire-exposed areas. The plan reported 696,562 dwelling and commercial policies in force in June 2026, up 157% since September 2022, with $768 billion of exposure. The California Department of Insurance (CDI) says residential growth slowed to about 16,000 policies in the first quarter of 2026 from 35,000 to 50,000 a quarter between 2024 and September 2025. For the causes behind the growth, see california's home insurance crisis.
What the policy covers
The residential product is a named-peril dwelling fire policy, form CFP 00 01 in the edition effective March 17, 2026. The base form covers fire and lightning, internal explosion and smoke. For more premium you add:
- Extended coverage, which brings in windstorm or hail, explosion, riot, aircraft, vehicles and volcanic eruption.
- Vandalism and malicious mischief.
- Optional replacement cost for the dwelling and for personal property. Without it, losses settle on an actual cash value basis: a total loss pays the property's fair market value up to the limit and partial losses are paid less depreciation.
- Ordinance or law, extra debris removal and coverage for plants, shrubs and trees.
The residential limit is $3 million per location. The plan does not calculate your rebuilding cost for you, so you and your broker pick the limit. Use the homeowners coverage gap checker and a home replacement cost estimator number rather than the market value of the house. Wildfire areas have seen rebuilding costs outrun older estimates, and ordinance or law coverage matters when code upgrades are likely.
What it leaves out
The plan's policy does not cover liability, theft, or water damage from a burst pipe or failed appliance, which are the coverages most owners assume they have. Flood and earthquake need separate policies; the FAIR Plan sells earthquake coverage through the California Earthquake Authority.
The usual answer is a DIC policy bought from a private insurer, designed to sit beside the FAIR Plan policy. A good DIC adds personal liability, theft and water damage, and sometimes broader perils and loss of use. The FAIR Plan does not sell DIC. CDI keeps a list of companies that do, and your broker can place one. Two policies mean two premiums, two sets of claims contacts and the risk of a coverage gap in between, so ask your broker to line up the forms so a loss is not caught between them.
A worked example (hypothetical)
Say you own a home with a $900,000 replacement cost estimate in a high wildfire zone, and your previous insurer nonrenewed you. Your broker places:
| Piece | Source | What it covers |
|---|---|---|
| Fire policy, $900,000 dwelling, replacement cost add-on, extended coverage | FAIR Plan | Fire, smoke, wind and hail, with replacement cost settlement |
| DIC policy | Private insurer | Liability, theft, water damage, and often broader loss of use |
| Earthquake | California Earthquake Authority | Separate if you want it |
Lay out each policy next to your old declarations page. If the old policy had ordinance or law at 25% and loss of use at 20% of Coverage A, check where each now comes from. The numbers are made up, but the exercise is the real one: map every coverage you had to a policy you have now.
How the plan is funded and why it affects you
The plan pays claims from premiums, reinsurance, a $750 million catastrophe bond and a line of credit. When those run short, it can assess its member insurers in proportion to their market share. After the January 2025 Los Angeles fires, the Commissioner approved a $1 billion assessment on February 11, 2025, the first in more than 30 years. Under CDI Bulletin 2025-4, member insurers could apply to recoup 50% of an assessment up to $1 billion, and all of any amount above, through a temporary fee on their own policyholders that CDI must approve in advance. State Farm, for example, set a fee of 1.13% of homeowners premium for two renewals starting December 1, 2025. On June 30, 2026 a Los Angeles Superior Court judge rejected Consumer Watchdog's challenge to the recoupment bulletins.
The practical point: a FAIR Plan deficit can show up on the bills of Californians who never bought a plan policy. A 2025 law, AB 226, lets the plan use catastrophe bonds and loans with the Commissioner's authorization, and AB 1680, the Make It FAIR Act, signed in 2026, responds to a CDI examination that found the plan had not complied with 17 critical recommendations. Whether those changes lower the odds of another assessment is a judgment call; both supporters and critics of the state's approach make fair points, and the outcome depends on future disasters.
Cost and discounts
Plan prices are rising. The plan asked for a 35.8% average dwelling rate increase and CDI approved 29.1% effective for new and renewal policies on October 15, 2026, with the largest increases in high wildfire-risk areas and reductions for some policyholders. Since November 15, 2025, dwelling policyholders can earn up to 12 wildfire-hardening discounts, worth up to 16.4% of the wildfire portion of the premium. They include clearing the first 5 feet around the house, a Class A roof, enclosed eaves, ember-resistant vents, multi-pane windows or shutters, and community programs such as Firewise USA. See home hardening for wildfire and insurance discounts for what each upgrade involves.
Price comparison needs care. A FAIR Plan premium plus a DIC premium is the correct comparison against a single homeowners quote, and the resulting total often looks different than either piece alone.
Getting back to the regular market
- Ask your broker to shop before each renewal. Insurers using the Sustainable Insurance Strategy rules have committed to write in distressed areas, and some of that commitment is met by taking FAIR Plan policies. The first rate filings approved under it, from Mercury and CSAA, came in December 2025. See California's Sustainable Insurance Strategy.
- Use the clearinghouse. Participating insurers can review your information and offer to move you; you can opt out of the sharing. CDI notes only some insurers participate.
- Document mitigation. Defensible space and hardening can improve your wildfire score and your eligibility.
- Keep the plan in force until the new policy is bound. A gap leaves you uninsured and puts your mortgage at risk.
Ask any new insurer whether it will cover your home at renewal for years or only the next term, because a move that ends in another nonrenewal costs time you may not have.
Claims
The plan takes claims online, by phone at 800-339-4099 or through your broker. After the 2025 Los Angeles fires the plan handled about 5,400 Eaton and Palisades claims and said it had paid nearly $3.5 billion by January 2026. CDI has taken formal legal action against the plan over what it calls illegal denials of hundreds of smoke damage claims. If your claim is delayed or denied, the CDI consumer hotline is 800-927-4357. See What the January 2025 Los Angeles wildfires taught homeowners for claims lessons from the fires.
Key takeaways
- The FAIR Plan offers a named-peril fire policy through a broker, not a homeowners package; liability, theft and water damage need a separate DIC policy.
- Loss settlement defaults to actual cash value; replacement cost is an optional add-on, so check the declarations page.
- Funding shortfalls are assessed against member insurers, which may recoup part from their own policyholders with CDI approval.
- Rates are rising, with a 29.1% average dwelling increase effective October 15, 2026, and wildfire-hardening discounts can reduce the wildfire portion.
- Treat the plan as temporary: shop each renewal, use the clearinghouse and keep it until a new policy is bound.