The California Fair Access to Insurance Requirements plan, or California FAIR Plan is an insurance program created 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 August 1968 by a statutory amendment to the California Insurance Code (specifically, section 10091 et seq. [4] [5] ), and is regulated by the office of the California Insurance Commissioner. The plans are typically more expensive and provide less coverage than commercial plans. [6] If the FAIR Plan does not have the money to pay out all claims, it collects money from insurance companies that operate in California. [6]
According to 2020 data, the FAIR Plan covers 2.5 percent of the statewide market share, but 20.4 percent of the market share in ZIP codes at high risk from wildfires. [7] 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. [8] 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. [6]
As of January 17, 2025, the FAIR Plan estimated that it covered 22 percent of the structures affected by the Palisades Fire, with a potential exposure upwards of $4 billion, and 12 percent of the structures affected by the Eaton Fire, with a potential exposure of over $775 million. [9] As of January 10, 2025, it had only $377 million available to pay out claims, in addition to $5.75 billion in reinsurance. [10] However, FAIR can only access reinsurance after it has paid out $900 million in claims. [9] 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. [11] [12]