The California FAIR Plan (California Fair Access to Insurance Requirements) is a fire 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 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. [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% of the structures affected by the Palisades Fire, with a potential exposure upwards of $4 billion, and 12% 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]