Resource Guide
California's wildfire insurance crisis has displaced hundreds of thousands of property owners since 2022. State Farm, Allstate, Farmers, and a dozen other carriers have exited or severely restricted the California market, driving landlords to the FAIR Plan in record numbers. This guide explains what happened, what your real options are, and how to structure real protection in 2026.
The California insurance crisis didn't happen overnight. It built over several years as carriers accumulated wildfire losses that exceeded what their pricing models anticipated and what the California Department of Insurance's rate approval process allowed them to recoup.
May 2022: State Farm pauses all new homeowners policy applications in California, citing the cost of rebuilding homes exceeding expectations. This is the first major public withdrawal announcement from a top-five carrier.
November 2022: Allstate confirms it has stopped writing new homeowners policies in California, citing construction costs and the growing risk of wildfire. The FAIR Plan begins a rapid growth trajectory.
2023: Farmers Insurance caps new policy applications. Liberty Mutual and several regional carriers restrict new business. The admitted market for wildfire-exposed properties effectively closes in dozens of high-risk ZIP codes across Southern California, the Bay Area foothills, and the Sierra Nevada.
2024: State Farm non-renews approximately 72,000 California property insurance policies — including approximately 30,000 homeowner and rental dwelling policies and approximately 42,000 commercial apartment policies. This is the single largest non-renewal action in California insurance history. The FAIR Plan grows to 668,609 policies by December 2025, representing 146 percent growth from its 2022 baseline of 333,929 policies.
January 2025: The Palisades and Eaton fires burn through portions of Los Angeles County, producing $28 to $35 billion in insured losses — among the costliest wildfire losses in U.S. history. SB 824's non-renewal freeze protections activate for affected areas.
2026: State Farm receives a 32.8 percent rate increase approval on California rental dwelling policies — the largest single rate increase on landlord insurance in the state's recent history. The FAIR Plan board approves a 29.1 percent rate increase effective October 15, 2026. The SB 824 non-renewal freeze expires January 7, 2026, and the second wave of non-renewals begins.
The California FAIR Plan was created in 1968 as the state's insurer of last resort. For landlords currently on the FAIR Plan — or headed there — understanding exactly what it covers is not optional. The FAIR Plan is not a comprehensive landlord policy. It is fire insurance.
The FAIR Plan Basic Fire form covers fire, lightning, internal explosion, wildfire smoke damage, some vehicle damage, and aircraft damage. Endorsements are available for some additional perils, including extended coverage for wind and vandalism in certain cases. The residential FAIR Plan policy can be written for single-family rentals and 2-4 unit properties. The commercial FAIR Plan program covers apartment buildings with five or more units.
Liability: The FAIR Plan does not include any liability coverage. If a tenant is injured on the property and sues the landlord, there is no coverage under the FAIR Plan. A landlord on the FAIR Plan without a DIC policy has zero liability protection.
Water damage: Burst pipes, flooding, sewage backup, and water damage from any source other than firefighting efforts to extinguish a covered fire are not covered by the FAIR Plan.
Theft and vandalism: Excluded from the basic form. Some endorsements may provide limited coverage, but this is not automatic.
Loss of rents: The FAIR Plan does not replace rental income during a repair period. A landlord whose property is damaged and uninhabitable receives no income replacement from the FAIR Plan.
Earthquake: Entirely separate policy required.
Landlord's personal property stored on premises: Limited or excluded.
With FAIR Plan rates increasing 29.1 percent effective October 15, 2026, the cost of incomplete FAIR Plan-only coverage is rising even as the coverage remains inadequate.
A Difference in Conditions (DIC) policy is designed to fill the gaps in a FAIR Plan policy. It covers the perils and coverage lines that the FAIR Plan excludes: liability, water damage, theft, and loss of rents. A landlord with a FAIR Plan plus a properly structured DIC policy has coverage that approaches — though doesn't always equal — a traditional DP-3 landlord policy.
DIC premiums vary by property type and coverage selected. For an SFR in LA County, DIC coverage typically costs $1,000 to $2,500 per year. For a small multifamily, expect $1,500 to $4,000. For apartment buildings, $3,000 to $10,000 or more. Combined FAIR Plan plus DIC total is often comparable in 2026 to surplus lines alternatives, which is one reason working with a broker to compare all options simultaneously matters.
Several E&S market carriers and some admitted carriers write DIC for California properties on FAIR Plan. The policies coordinate with the FAIR Plan at claim time: the FAIR Plan pays covered fire losses up to its limit, and the DIC pays the coverage lines the FAIR Plan excludes. DIC coverage limits should be set to match or exceed the FAIR Plan limits to avoid gaps at the junction. A coverage review with Taylor Arvayo, CPCU, CIC includes evaluation of both FAIR Plan and DIC options simultaneously.
Surplus lines — also called the non-admitted or excess and surplus (E&S) market — consists of carriers that are not licensed as admitted insurers in California but are authorized to write business through licensed surplus lines brokers. These carriers operate under different rules: they are not subject to California's rate approval requirements, which means they can price risk more accurately and write properties that admitted carriers have abandoned.
The surplus lines market is the primary private market alternative for wildfire-zone California landlords. Lloyd's of London syndicates, Scottsdale Insurance Company, Burns & Wilcox, and Amwins are among the markets active in California's high-risk property space. Surplus lines carriers can write policies that look more like traditional DP-3 or commercial landlord policies — with liability, loss of rents, water damage, and other coverages included — rather than the limited fire-only coverage of the FAIR Plan.
The trade-off: surplus lines carriers are not backed by California's Insurance Guarantee Association, which protects policyholders if an admitted carrier becomes insolvent. This makes financial stability of the surplus lines carrier more important to evaluate. Premiums are higher than admitted when admitted is available, but in many wildfire-zone ZIP codes, surplus lines is the only competitive private market that exists. California's Surplus Lines Association maintains registration and compliance oversight for the market.
California's AB 2756, effective 2025, requires admitted insurance carriers to offer premium discounts to policyholders who implement certified wildfire mitigation measures on their properties. This is a significant policy change — for the first time, carriers are required to financially recognize mitigation efforts rather than simply non-renewing the risk.
Qualifying mitigation measures under AB 2756 include: defensible space of at least 100 feet around the structure (clearing brush, dead vegetation, and combustible materials), Class A fire-resistant roofing (highest rated), ember-resistant vents (metal mesh screens that prevent embers from entering attic and crawl spaces), fire-resistant decking materials, and enclosed eaves. Landlords who have implemented these measures on rental properties should document them thoroughly — photographs, receipts for materials, contractor invoices — and provide this documentation to their broker to use in negotiating mitigation credits with admitted carriers or in marketing to surplus lines carriers that offer their own mitigation-based pricing adjustments. Surplus lines carriers are not required to follow AB 2756 but many have their own mitigation discount programs.
Step 1: Note the effective date. Your non-renewal notice states the date your coverage ends. California law requires at least 45 days notice for non-renewal. You have time, but the clock is running. Mark the date prominently.
Step 2: Contact an independent broker immediately. Not your current carrier's agent — that agent represents the carrier, not you. An independent broker represents you and has access to multiple markets. This is the single most important step.
Step 3: Gather your property information. Your broker will need: property address, year built, construction type (wood frame, masonry, fire-resistive), roof type and age, square footage, number of units if multifamily, current coverage limits, and current premium.
Step 4: Understand the FAIR Plan as your backstop. If the private market search doesn't produce adequate options before your non-renewal date, the FAIR Plan is available as immediate coverage. But plan for DIC simultaneously — don't let the FAIR Plan sit alone.
Step 5: Do not let coverage lapse. A gap in coverage — even a single day — creates a period of total exposure that cannot be closed retroactively. If a loss occurs during a lapse, you have no coverage. Carriers also view a coverage lapse as a negative underwriting factor when evaluating new applications. Call (858) 367-0782 if you have a non-renewal date approaching and haven't found a solution.
SB 824 prohibited insurance carriers from non-renewing residential property policies in areas covered by a declared state of emergency for one year following the disaster declaration. After the January 2025 Palisades and Eaton fires, this protection activated for properties in the designated disaster area and immediately surrounding ZIP codes. That freeze expired January 7, 2026.
The expiration has two significant implications. First, properties that were protected from non-renewal while the freeze was in effect can now receive non-renewal notices from carriers that want to exit those areas. Second, properties adjacent to the 2025 burn zones — neighborhoods that were not themselves in the declared disaster area but are in high-risk corridors surrounding the fires — may now face non-renewals that had been indirectly suppressed during the freeze period.
The second wave of non-renewals in the greater Los Angeles area, the Ventura County corridor, and other areas near the January 2025 fires is underway now. Landlords in these areas who have not recently reviewed their coverage — particularly those who have been on the same policy for several years — should treat this as an immediate priority, not a future concern.
Note the effective date on the non-renewal notice immediately — this is the date your current coverage ends. California law requires carriers to give at least 45 days notice for non-renewal, so you typically have time to act, but you cannot afford to delay. Contact an independent broker immediately — not your current carrier's agent, who represents the carrier and can only offer what that carrier writes. Gather your property information: address, year built, construction type, square footage, current coverage limits, and current premium. Your broker will search the market for private alternatives, evaluate the FAIR Plan as a backup, and coordinate DIC coverage to fill FAIR Plan gaps. Never let coverage lapse — a gap cannot be closed retroactively.
The California FAIR Plan is available for most residential and commercial rental properties in California, including single-family rentals, 2-4 unit properties, and larger apartment buildings. There is no geographic restriction — the FAIR Plan was specifically designed to cover properties in high-risk areas that private carriers won't insure. Eligibility generally requires that the property has been declined by at least one admitted carrier. Properties must meet basic insurability standards — structures in severe disrepair or with open fire code violations may be ineligible. The FAIR Plan can typically be bound within a few days of application.
DIC policy premiums vary based on property type, location, coverage lines added, and the specific carrier. For a single-family rental, DIC covering liability, water damage, and loss of rents typically costs $800 to $2,500 per year. For a small multifamily property, expect $1,500 to $4,000. For larger apartment buildings, DIC premiums can range from $3,000 to $10,000 or more. Combined FAIR Plan plus DIC totals in high-risk areas typically run $4,000 to $9,000 or more for an SFR — significantly more than pre-crisis admitted market pricing, but the realistic cost of the current market environment.
Yes — not all wildfire zone properties have lost private market access. Carriers evaluate individual properties and ZIP codes, and some areas within wildfire risk zones still have admitted carrier options, particularly if the property has wildfire mitigation measures, is in a defensible space, has a Class A fire-resistant roof, or is in a suburban interface with a more manageable risk profile. Properties with recent construction, updated roofing, ember-resistant vents, and documented defensible space are more likely to find admitted market options. An independent broker with current market access is the only way to know what's genuinely available for your specific address.
Yes. The surplus lines market, including Lloyd's of London syndicates, Scottsdale Insurance, Burns & Wilcox, and others, continues to write wildfire-exposed California rental properties that admitted carriers have exited. Surplus lines carriers operate under different rules — they are not subject to California's rate approval requirements, which means they can price risk more freely and write risks that admitted carriers won't. The trade-off is that surplus lines carriers are not backed by California's Insurance Guarantee Association. Surplus lines premiums are typically higher than admitted when admitted is available, but often the only competitive private market option in high-risk areas.
SB 824, signed into law in 2018, prohibited insurance carriers from non-renewing residential property insurance policies in areas covered by a declared state of emergency for one year following the declaration. The most recent major application covered properties in areas affected by the January 2025 Los Angeles wildfires. That freeze expired on January 7, 2026. As of that date, carriers can once again non-renew policies in affected and surrounding areas without restriction. The second wave of non-renewals is now underway — properties adjacent to the January 2025 burn zones may now receive non-renewals that were previously frozen under the SB 824 protection.
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