State-run property insurance program in California
The California FAIR Plan is an fire insurance program backed by the state of California that is used by property owners who cannot find private market insurance coverage.[1][2][3] The FAIR Plan was established in 1968 by a statute of the California Insurance Code, and is regulated by the office of the California Insurance Commissioner. The plans are typically more expensive and provide less coverage than commercial plans.[4] If the FAIR Plan does not have the money to pay out all claims, it collects money from insurance companies that operate in California.[4]
According to data from 2020, the FAIR Plan covers 2.5% of the statewide market share, but 20.4% of the market share in ZIP codes at high risk from wildfires.[5] Between 2020 and 2024, the number of homes covered by FAIR Plan policies more than doubled, while the Plan's total exposure (including commercial properties) nearly tripled.[6]
Between 2023 and 2024, the number of homes in the ZIP code affected by the January 2025 Palisades fire covered by the FAIR Plan almost doubled.[4] As of January 8, 2025, the plan has around 6 billion dollars of exposure within Pacific Palisades.[7] As of January 14, 2025, the plan could have as much as $30 billion in total losses from the January 2025 Southern California wildfires, and as of January 10, 2025, it had only $377 million available to pay out claims, in addition to $5.75 billion in reinsurance.[8] To make up the shortfall, according to Consumer Watchdog, all California homeowners could face a $1,000 to $3,700 surcharge as FAIR can seek money from private insurers who would likely pass the charge to their customers.[9][10]