California's FAIR Plan now covers 684,388 dwellings and commercial properties, up 152% since September 2022, with $750 billion in total exposure. Plenty of people with a policy in hand. What's in the policy is another matter.
The FAIR Plan is a named-peril policy. It covers fire, lightning, smoke, internal explosion. A standard homeowners policy works the opposite way: everything's covered unless it's specifically excluded. The FAIR Plan covers nothing unless it's specifically listed. Liability, water damage, theft, temporary housing if your place burns down, all absent unless you bought the endorsement. And it defaults to actual cash value, meaning depreciation is subtracted before you're paid. Your twenty-year-old roof is worth what a twenty-year-old roof is worth.
Most policyholders need a second Difference in Conditions policy to approximate real coverage. Combined cost runs roughly double a standard policy. For less protection.
A 29.1% average rate increase takes effect October 2026. And after the January 2025 LA fires generated roughly $4 billion in FAIR Plan losses, member insurers were assessed $1 billion, up to half of which can be passed to their own policyholders. You don't need a FAIR Plan policy to pay for FAIR Plan losses.
Florida's residual market, Citizens, shrank from 1.26 million policies to about 278,000 in under two years. Hurricanes didn't stop. The legislature reformed litigation rules and created mandatory transfer to private carriers. California has no equivalent mechanism, and nobody's building one. The word "covered" is doing a lot of work.
Not included in a standard FAIR Plan policy:
- Personal liability protection
- Water damage (any source)
- Theft or vandalism
- Additional living expenses
- Wind or hail
- Earthquake or flood
- Code-upgrade costs after a loss
All require separate endorsements or entirely separate policies.
Default valuation: Actual cash value (depreciated), not replacement cost. RCV available as endorsement.
Residential coverage cap: $3 million per structure, raised from $1.5M under AB 2167 effective January 2026.
Cost comparison (2025 averages):
- Standard HO-3 policy: ~$1,450/yr
- FAIR Plan alone: ~$3,100/yr
- FAIR + DIC wrap-around: higher still
The assessment ripple: The February 2025 levy was the FAIR Plan's first insurer assessment since 1994. Carriers can pass up to 50% to all California policyholders.