Homeowners Insurance in California

In much of the state, wildfire is the biggest thing insurers look at. Homes near brush, forest, or hillsides often cost more to insure. Some providers have stopped writing new policies in high-risk areas. That's why some people get a nonrenewal notice even without ever filing a claim.

The California FAIR Plan is a backup option for people who can't get a regular policy. It's not a state agency. It's a pool that all home insurers in California pay into.

The FAIR Plan mainly covers fire, lightning, smoke, and some explosions. It doesn't cover theft, water leaks, or liability. Liability is what pays if someone gets hurt at your home and blames you. To fill those gaps, most FAIR Plan customers buy a second policy called a difference in conditions (DIC) policy. People also call it a "wraparound" policy.

The FAIR Plan can cover a home for up to $3 million. If your home costs more than that to rebuild, you'll need extra coverage on top.

California's Department of Insurance calls its plan the Sustainable Insurance Strategy. It's the biggest change to the state's insurance rules since Proposition 103 in 1988. Here's the deal it makes with insurers:

• Insurers get new pricing tools. For the first time, they can use forward-looking wildfire models to set rates, instead of only past losses. The state approved the first one, from Verisk, in July 2025. These models can also give credit for steps that lower fire risk.
• In return, they must write more policies where it's hard to get coverage. An insurer that uses these models must write at least 85% of its statewide market share in wildfire-distressed areas. If a company covers 10% of homes statewide, for example, it has to reach at least 8.5% in those areas.

The Department says more than 1.5 million homeowners in high-risk areas and on the FAIR Plan stand to get more options. If you're on the FAIR Plan now, it's worth getting new quotes each year as insurers return. Questions? The Department's consumer hotline is 1-800-927-4357.

Under California's Safer from Wildfires rules, insurers must give you a discount for certain steps that lower fire risk. These include a fire-resistant roof, vents that block embers, and clearing brush and plants near your home. Some community-wide programs also count.

Many people never ask for these discounts. When you get quotes, ask each provider which ones you qualify for.

A standard California home insurance policy doesn't cover earthquake damage. You need a separate earthquake policy. State law says your insurer must offer you earthquake coverage in writing, and repeat that offer every two years. Most of these policies come through the California Earthquake Authority (CEA).

Earthquake policies often have a high deductible. The deductible is the part of a claim you pay before insurance pays. Ask what yours would be in dollars, not just as a percent.