The California FAIR Plan, Explained: Coverage, Limits and Alternatives

The Legislature set it up more than 50 years ago. The Department of Insurance describes it as a private association run by insurance companies, not taxpayers, and by law its member insurers share its profits and losses.

Department data shows the FAIR Plan grew fastest in counties with high wildfire risk. Around Santa Clarita, that points to houses that back onto brush or canyon land, like parts of Sand Canyon and Placerita Canyon, after the regular insurer sends a non-renewal letter. Our guide to handling a home insurance non-renewal covers the steps that come before the FAIR Plan.

The plan is still big, but its growth is slowing. In August 2026 the Department of Insurance reported that FAIR Plan policy growth dropped to 1.9% in the second quarter, the third quarter in a row of slower growth, and estimated that about 24,000 policies left the plan in April and May alone.

Two terms are worth slowing down for. Actual cash value means the payout subtracts wear and tear, so a 20-year-old roof pays far less than a new one costs. Fair rental value is the FAIR Plan's version of loss of use: it's based on what your home would rent for, not on your actual hotel and meal receipts.

The FAIR Plan doesn't sell DIC policies itself. The Department of Insurance keeps a list of insurers that offer a DIC built to complement a FAIR Plan policy (opens in a new tab). It includes California Automobile Insurance Company, part of Mercury Insurance Group, and Standard Fire Insurance Company, part of Travelers. Depending on the policy, a DIC can add:

• Water damage from a sudden leak, like a failed supply line under the kitchen sink.
• Theft of belongings, which the FAIR Plan never covers.
• Personal liability if a guest is hurt at your home or you damage someone else's property.
• Extra living costs beyond the FAIR Plan's fair rental value, on some DIC policies.

Plenty of FAIR Plan homeowners skip this step. A Department of Insurance fact sheet found that from 2020 to 2022 there was roughly one new or renewed DIC policy for every two FAIR Plan policies, which suggests many FAIR Plan homes had no coverage for theft, leaks or a lawsuit.

If it looks like your home is headed for the FAIR Plan, we'll check standard options first. If it comes to that, we can help you compare the FAIR Plan and DIC pieces with the homeowners policy you're replacing, so you can see exactly what changes.

If rebuilding your house would cost more than that limit, ask whether a DIC or excess policy can cover the difference before you need it. The FAIR Plan won't pick the number for you. Its website says its customer service staff legally can't advise you on coverage or limits, and that it doesn't estimate your home's rebuild cost, so that work falls to your broker.

The 29.1% figure is an average. Reporting on the increase noted that homes in high wildfire-risk areas may pay significantly more, while some lower-risk urban homes could see small changes or even decreases. On the plus side, the Department of Insurance says the FAIR Plan gives residential policyholders a discount on the wildfire portion of the premium for hardening the home, and lets you pay monthly without a fee.

Not every broker is registered with the FAIR Plan, and the plan says using a broker adds no cost. Rentals qualify too: the dwelling policy covers one- to four-unit homes rented to a tenant for at least a year, and our landlord insurance page compares that with a regular landlord policy.

• Another regular insurer. Each company scores wildfire risk with its own model, so one "no" isn't everyone's answer. The carriers we quote for homes include Mercury Insurance and Travelers, both on the Department of Insurance's 2026 list of insurance groups committing to stay and grow in California. Acceptance is always up to the carrier's underwriting. Here's why an independent agent helps at this stage.
• The Home Insurance Finder. The Department's Home Insurance Finder (opens in a new tab) searches by ZIP code or city and has a box for companies that may write in higher fire-risk areas. A listed company may not be taking new customers, so treat it as a call list.
• Hardening the home. A Class A roof, ember-resistant vents and a cleared 5-foot zone around the walls can earn discounts and help with underwriting. Our Santa Clarita wildfire guide lists the steps insurers recognize.
• Surplus lines insurers. These non-admitted companies can write homes the regular market declines, after a broker has searched the admitted market. Ask how your state protections differ before you buy.

More doors may open. Under the state's Sustainable Insurance Strategy, insurers that use catastrophe models or reinsurance costs in their California rates must write at least 85% of their statewide market share in wildfire-distressed areas, which the Department of Insurance says is meant to move consumers off the FAIR Plan.

The Department of Insurance's August 2026 advice to FAIR Plan customers was plain: shop regularly, call more than one agent or broker, and ask which companies are writing new policies in your area. We suggest starting about two months before renewal.

The FAIR Plan clearinghouse

The FAIR Plan can share some of your policy information with insurers in its clearinghouse, and those companies may offer to move you to a regular policy. You can opt out on the FAIR Plan's website.

What the 2026 law adds

• Yearly reminders. AB 69, signed September 27, 2026, requires the FAIR Plan to send a notice at issue and at each renewal, at least once a year, telling you to ask your broker about other coverage and that you have the right to shop around.
• Data sharing rules from 2028. Starting January 1, 2028, the law sets terms for sharing policyholder information with clearinghouse insurers. If you have a broker of record, offers go to you and the broker at the same time, and you can opt out.
• Broker training. Agents and brokers registered with the FAIR Plan must complete a Department-approved course on advising policyholders about regular-market options.

When an offer arrives, compare it with the FAIR Plan and DIC together, not the FAIR Plan alone. See homeowners insurance in California for the parts of a standard policy, and Santa Clarita homeowners insurance for what carriers ask about houses in the valley.

Member insurers were allowed to ask to recoup half of what they paid from their own customers, if reinsurance didn't cover it, so the cost of a FAIR Plan shortfall can reach people who have never held a FAIR Plan policy.

Since then, FAIR Plan rates have gone up, its growth has slowed, and more insurers have promised to write in wildfire areas. For homeowners, the lesson is simple: the FAIR Plan is there when you need it, but it shouldn't be where you stay.