One of California’s largest insurers will hike rates nearly 30% this fall – San Francisco Chronicle

Starting in October, customers on the California FAIR Plan will get hit with the insurer’s largest rate hike in years.

Premiums will rise overall by just under 30% for the FAIR Plan’s nearly 663,000 residential policyholders.

But the exact number varies depending on a homeowner’s specific situation. About half of all customers will see their rates increase 30% to 50%. A quarter of customers will see their rates decrease — by amounts up to 80%. The remaining quarter will see rate hikes below 30% or between 50% and 200%.

Policyholders can expect to see their new premium at their first renewal date after Oct. 15.

Among the hardest-hit ZIP codes is the community of Grizzly Flats in the Sierra Nevada foothills, where nearly 150 customers will go from paying an average of $2,671 a year to $5,485. In the 94563 ZIP code covering the East Bay city Orinda, rates are set to rise by an average of 31%, bringing the average premium in the community up to just under $7,000.

In San Francisco, most policyholders are slated to see rates go down.

“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 spokesperson for the FAIR Plan said. 

This is the first statewide rate increase for the FAIR Plan since 2023, when it raised premiums by 15.7% overall. The FAIR Plan is required to submit an updated rate filing at least every two years, according to the spokesperson.

Since its last increase, California’s insurance crisis has driven the FAIR Plan’s residential policy count to double. Data shows it’s continued to grow over the past year, but the pace has slowed significantly. Insurance Commissioner Ricardo Lara recently told state lawmakers that the trend was a promising sign of California’s insurance market beginning to improve.

The FAIR Plan is California’s state-created but privately run insurer of last resort. It now insures more homes than all but a few of the largest insurers in the state, but covers only damage from fire. To be protected against water leaks, liability claims and more, customers are required to purchase a second policy from a different insurer. Policyholders are supposed to turn to the FAIR Plan only if they’re incapable of getting a policy from the private market.

The FAIR Plan’s growth over the past few years, especially in some of the most wildfire-prone parts of the state, stretched it thin — to the point where it ran out of money to pay claims from the 2025 Eaton and Palisades wildfires.

State statute required private insurers to help cover the difference to the tune of $1 billion, half of which is currently being passed on to those insurers’ customers.

Even before the Los Angeles County wildfires, FAIR Plan President Victoria Roach had been warning that the insurer would need a substantial rate increase to handle its growth and prepare for the possibility of a major wildfire.

When the FAIR Plan first submitted its request last October, it asked regulators to approve an increase just under 36%. At the time, the insurer said it would have sought an 80% increase if not for recent reforms by the Department of Insurance known as the Sustainable Insurance Strategy.

These reforms allow the FAIR Plan and other insurers to price wildfire risk based on forward-looking risk models that take into account potentially worsening fires, rather than historical data, and to charge customers part of their cost of reinsurance — insurance for insurance companies.

Several other major insurers have been approved for increases under these reforms. They include Farmers Insurance Group, Mercury Insurance, CSAA and others.

The FAIR Plan offers discounts for those who perform wildfire mitigation work on their homes.