https://calmatters.org/economy/2025/02/homeowners-insurance-costs-rising-in-california-fair-plan/ Nonprofit & Nonpartisan News * About Us * Newsletters * Donate About Newsletters Search * Politics * Justice * Environment * Economy * Health * Housing * Education * Inequality * Digital Democracy * Technology * Commentary * Daily Newsletter * Explainers * Data & Trackers * Programs + California Divide + CalMatters for Learning + College Journalism Network + What's Working + Youth Journalism * Events * Donate + Manage donation * Newsletters * About Us + Impact + News and Awards + Funding + Policies + Sponsorship + Our Team + Jobs * Inside the Newsroom * CalMatters en Espanol * Videos CalMatters is your nonprofit and nonpartisan newsroom dedicated to explaining how state government impacts our lives. * Facebook * Instagram * Twitter * LinkedIn * YouTube * Politics * Education * Housing * Economy * Environment * Inequality * California Voices * Events Posted inEconomy California homeowners will have to fund half of high-risk insurer's $1 billion 'bailout' Avatar photo by Levi Sumagaysay February 11, 2025Updated February 12, 2025 Republish Share this: * Click to share on X (Opens in new window) * Click to share on Facebook (Opens in new window) * Click to share on WhatsApp (Opens in new window) * A burned-out structure with scorched walls and an arched doorway stands amidst charred vegetation. Smoke lingers in the background, and a partially intact gate with the number '203' leads to the property. A few green trees and palm trees remain standing in the hazy, orange-lit landscape. The remains of a smoldering home in an Altadena neighborhood affected by the Eaton Fire on Jan. 8, 2025. California's insurer of last resort is facing $1 billion in losses from Southern California wildfires. Photo by Jules Hotz for CalMatters Welcome to CalMatters, the only nonprofit newsroom devoted solely to covering issues that affect all Californians. Sign up for WhatMatters to receive the latest news and commentary on the most important issues in the Golden State. After saying it would run out of funds by March, California's last-resort fire insurance provider will impose a special charge of $1 billion on insurance companies -- which will in turn pass the costs along to homeowners -- the first such move in more than three decades. The state Insurance Department today approved a request from the provider, the FAIR Plan, to impose the charge and ensure it stays solvent as it covers claims from victims of the Los Angeles County fires, the department said in an order by Commissioner Ricardo Lara. Most California home and fire insurance customers will see temporary fees added to their insurance bills as part of the charge, known as an assessment -- marking the first time insurance companies will have imposed an assessment directly on customers. The FAIR Plan is a pool of insurers required by law to provide fire insurance to property owners who can't find insurance elsewhere. Its customer base has grown dramatically in the past several years as insurance companies have increasingly refused to write or renew policies in the state, citing increased risk of wildfires. It now has more than 451,000 policies. Many LA fire victims have insurance through the FAIR Plan. Residents of the Pacific Palisades, where thousands of structures burned last month, held 85% more FAIR Plan policies in September than they had a year prior. More on the LA Fires LA fires could drastically drive up insurance premiums -- and test California's new market rules LA fires could drastically drive up insurance premiums -- and test California's new market rules January 9, 2025January 11, 2025 The FAIR Plan assessment is the latest insurance fallout from the LA fires. State Farm, California's largest property insurance provider, recently asked for permission to temporarily raise its premiums an average of 22% because of the claims it is facing from the fires. The insurance department is still considering that request. The FAIR Plan's president, Victoria Roach, had been warning about its ability to pay claims in case of catastrophe, telling a state Assembly committee last year that the plan "one event away from a large assessment." 1. Stay informed, effortlessly 2. Stay informed, effortlessly 1. Get a sharp, nonpartisan digest of the state's most important issues, once a week. 2. Get a sharp, nonpartisan digest of the state's most important issues, once a week. [Asset-4] Email address [ ] By clicking subscribe, you agree to the terms. [Sign up for free now] [ ] [ ] [ ] [ ] [ ] [ ] [ ] D[ ] As of Feb. 9, the plan had paid more than $900 million in claims, the commissioner's order said. "A $1 billion assessment puts the FAIR Plan at an estimated cash position of just under $400 million by July 2025, as the 2025 wildfire season is just beginning," Roach told the insurance department in the plan's request for the assessment. Insurance companies will need to submit filings with the insurance department before they can collect the one-time fees from their customers, said Michael Soller, department spokesperson. It is unclear on what percentage of policyholders' premiums the fees will be based. "The FAIR Plan does not have a role in determining how insurers manage costs associated once an assessment is approved," the plan said in a press release. Under new regulations that took effect this year as part of Insurance Commissioner Ricardo Lara's effort to address the growing difficulty of finding property insurance in California, insurance customers will now have to shoulder 50% of any assessment through a temporary fee added to their premiums. Before the new rules went into effect, the plan would have gotten all the additional funds directly from its member companies, which would have then tried to recoup that money by raising premiums. The insurance industry supports the change. "This is essential to prevent even greater strain on California's already unbalanced insurance market and avoiding widespread policy cancellations that would jeopardize coverage for millions of Californians," said Mark Sektnan, vice president for state government relations for the American Property Casualty Insurance Association, in a written statement. But Consumer Watchdog, a consumer advocacy group, is considering suing over the fact that consumers are now on the hook for the additional funding for the FAIR Plan, which its executive director calls a "bailout." "We'll be exploring every legal option to protect (consumers) from those surcharges," Carmen Balber told CalMatters. Balber added that some insurers, such as Mercury General Corp., said shortly after the L.A. fires began in early January that they expected to have adequate reinsurance to cover any possible increased contributions they would have to make to the FAIR Plan. In that case, "are they going to let insurers double dip and charge consumers (anyway)?" Balber asked. The insurance department said the last time the state approved additional funds for the FAIR Plan was in 1993, after the Kinneloa Fire in Altadena and the Old Topanga Fire in Malibu and Topanga. Some of those areas were also affected by the fires this year. The additional funds approved then are equivalent to $563 million today, the department said. In a statement, Lara characterized the new regulation as a "necessary consumer protection action." The commissioner added: "The fact that we are once again facing this issue 30 years after wildfires devastated these same communities highlights the need for change." For the record: An earlier version of this story misstated how the FAIR Plan assessment will be charged to consumers. It will be passed along by insurance companies, not charged by the FAIR Plan. More on Fire Insurance in California State Farm asks for more insurance rate increases after LA fires State Farm asks for more insurance rate increases after LA fires February 4, 2025February 11, 2025 Californians: Your rent may go up because of rising insurance rates Californians: Your rent may go up because of rising insurance rates August 13, 2024August 13, 2024 Read more from CalMatters [engage_text] Text Get breaking news on your phone. [engage_down] Download Keep up with the latest via our app. [engage_subs] Sign up Receive free updates in your inbox. Nonpartisan, independent California news for all We're CalMatters, your nonprofit and nonpartisan news guide. Our journalists are here to empower you and our mission continues to be essential. * We are independent and nonpartisan. Our trustworthy journalism is free from partisan politics, free from corporate influence and actually free for all Californians. * We are focused on California issues. From the environment to homelessness, economy and more, we publish the unfettered truth to keep you informed. * We hold people in power accountable. We probe and reveal the actions and inactions of powerful people and institutions, and the consequences that follow. But we can't keep doing this without support from readers like you. [Frame-3616] Please give what you can today. Every gift helps. GIVE Avatar photo Levi SumagaysayEconomy Reporter levi@calmatters.org * Levi Sumagaysay covers the California economy for CalMatters with an eye on accountability and equity. She reports on the insurance market, taxes and anything that affects the state's residents, labor... More by Levi Sumagaysay The Latest A view of a plane on the tarmac of an airport through the windows of a terminal. In the foreground of the photo is two silhouettes of people in the airport, one sitting down working at their laptop while the other walks by with their luggage. In the reflection of the glass, more people can be seen waiting in the airport terminal. Who's paying for California politicians' travel? After CalMatters' report, audit proposes a legal fix Insurance Commissioner Ricardo Lara, dressed in a navy blue suit, speaks while holding a microphone, gesturing with their hands to emphasize a point. The backdrop prominently displays the "CALMATTERS" logo. The scene is moderated discussion, with a small audience in the foreground. Big homeowner rate hike from State Farm shot down by California regulator An aerial view of a burned-down neighborhood on a hillside with debris from burned homes and burnt trees can be seen. A white truck can be seen parked in the neighborhood among the destruction. In the background, a skyline view of the city can be seen with the ocean in the horizon. Should builders permit their own projects? Post-fire LA considers a radical idea Students collaborate on solving additional problems inside Bridgette Donald-Blue's classroom at Coliseum Street Elementary in Los Angeles on Feb. 28, 2023. Photo byPablo Unzueta for CalMatters How Trump's drastic K-12 plans will -- and won't -- change California schools A busy outdoor scene on a college campus shows people walking and biking along a tree-lined path. In the foreground, a cyclist with a backpack rides a bicycle with turquoise wheels. Other individuals walk in various directions, some carrying bags or wearing masks. Large potted plants and lush greenery frame the setting, with more students visible in the background. Fewer California high school seniors are applying for financial aid. 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