Exploring the Recent Growth in the California FAIR Plan

By Xuesong You and Carolyn Kousky

The California FIAR Plan is a so-called residual market. These are state-created programs for residents who cannot find or afford insurance coverage in the private market. Around the country, these programs take different forms and cover different perils. 

Over half the states have FAIR Plans. FAIR plans were originally created in 1968 following federal legislation to provide property insurance in urban areas where private insurers had withdrawn due to concern over civil disruption, as well as a history of redlining. The California FAIR Plan is a non-voluntary association of all admitted insurers in the state who share in its profits and losses in proportion to market share. Although established by state statute, it is not a state agency or public entity and does not rely on taxpayer funding.

The California FAIR Plan has now expanded beyond its original remit and provides access to fire insurance in areas of high-wildfire risk. Note that FAIR Plan policies cover only fire and lightning, internal explosions, and smoke damage. FAIR Plan policies do not provide the broader coverage in a typical homeowner's policies, such as liability coverage and coverage against other perils, such as theft or wind. In order for households to be fully covered against those perils, they must also purchase a “differece-in-conditions” (DIC) policy that offers coverage for the non-fire perils in a standard property policy.

Growth in the FAIR plan has been substantial since 2018 and only recently, in the last quarter of 2025, has shown signs of slowing. The FAIR Plan reports that average monthly new business in the first quarter of 2026 was over 20% lower than seen in FY 2025 but still higher than 2022. 

While the FAIR Plan has seen growth from all areas of risk [1], the greatest growth has come from the very high-fire-risk areas. For example, our analysis finds that in ZIP codes with the highest wildfire risk, the number of California FAIR Plan policies surged by over 19 times from 2009 to 2024. In comparison, the FAIR plan has seen a decline of 47.5% in the lowest risk areas.

The map below shows the percentage of residential structures in various ZIP codes that currently have a FAIR Plan policy providing structural coverage as of March 2026. FAIR Plan policies are primarily concentrated in areas with a very high risk of fire. In these highest-risk ZIP codes, as indicated by the patterned regions on the map, approximately 41% of residential structures are covered by a FAIR Plan policy, compared to just 4% in other lower-risk areas.

Use the tool below to select ZIP codes and compare key statistics for residential FAIR Plan policies:

EndNotes

[1]  The measure of wildfire risk is based on the average fire risk scores at the ZIP code level from CDI’s Wildfire Risk Report, measured as of the 2018 estimates. Based on these scores, we categorize California ZIP codes into five groups: very low, low, moderate, high, and very high fire risk, by dividing them into quartiles. Collected from residential homeowners insurers by the CDI, these scores represent a policy-weighted average fire risk for residential properties within each ZIP code, reflecting the actual distribution of policies in California’s residential insurance market. Insurers reported the distribution of property-level risk scores based on outputs from commercial models that they used to assess the wildfire risk of individual properties among the policies they issued, typically measured by factors such as fuel, slope, and road access. The risk score ranges from 0 to 4, where a score of 4 indicates the highest level of wildfire risk for a given ZIP code. ZIP codes with fewer than 10 reported insurance policies are excluded from this analysis.