In addition to dealing with the physical and emotional toll of wildfire risks, many Californians face another challenge this year – a nearly 30% rate hike from the state’s insurance program, known as the FAIR Plan.
“Average FAIR Plan rates will increase 29% effective Oct. 15, down from the 36% requested,” the California Department of Insurance recently told The New York Post in an email.
The California FAIR Plan Association was established to meet the needs of homeowners who can’t find insurance in the traditional marketplace. For example, a California resident who lives in an area at increased risk for wildfire who spoke with Audacy station KCBS Radio in the Bay Area this year. That resident said his premiums have more than doubled.
According to the New York Post’s report, the California Department of Insurance said that “policies available from large and specialty insurers in coming months create new options for homeowners outside the FAIR Plan.”
Right now, there are an estimated 663,000 owners covered by FAIR and most of them are expected to see their bills increase, the Post said. Increases will depend on where properties are located. The San Francisco Chronicle reported that around half of customers will face increases of between 30% and 50%. About a quarter will actually see their premiums drop, in some cases by as much as 80%.
“The largest component of the increase relates to the wildfire portion of policyholders’ 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,” a FAIR spokesperson explained to The Post.
Per the outlet, the program warned last year that it was low on funds after the Palisades and Eaton caused severe damage in the Los Angeles area.
“It appears policy holders will now pay the price,” said The Post. Previously, rates for FAIR policyholders increased by 15% in 2023.
KCBS Radio reported earlier this month that Farmers Insurance said that it would raise its rates by 1.5% later in the fall.
“On the flip side of the company has agreed to increase the number of homes that it will ensure... that it all underwrite by about 5,000,” noted KCBS Radio reporter Matt Bigler. According to the station, that change came in part due to statewide insurance reforms that require insurers to expand the number of homes that they will insure in wildfire prone areas.
In February, the California Department of Insurance announced legislation to transform the FAIR plan to improve coverage and transparency. On May 4, the department also said that it was taking legal action against State Farm after an investigation found “widespread mishandling of LA wildfire claims,” affecting potentially thousands of victims.
