SACRAMENTO — California legislators are considering a major expansion of the state’s insurance program for high-risk properties as private insurance companies increasingly drop coverage for existing customers.
During an Assembly Insurance Committee meeting on Jan. 28, 2026, Assemblymember Lisa Calderon and other lawmakers proposed turning the California FAIR Plan into a broader safety net for residents abandoned by the private market. Currently, the state-run program only covers fire damage. The new proposal would expand it into a full-service option that includes standard protections like theft coverage and liability insurance, which pays for legal costs or injuries that happen on a property.
The push for expansion comes as a record number of Californians rely on the plan. According to the FAIR Plan, the total value of property insured by the program reached $724 billion by the end of 2025. This represents a 230% increase since December 2022. Of that total, about $670.5 billion is for properties located in high-risk wildfire zones.
Wildfire Impact and Financial Strain
Heavy financial losses from recent disasters have intensified the debate. A study by the Los Angeles County Economic Development Corp. and the Southern California Leadership Council looked at the 2025 wildfires and estimated that the Eaton and Pacific Palisades fires caused between $28 billion and $53.8 billion in property damage.
The financial burden on individual homeowners is also growing. A report released in January 2026 by the nonprofit Department of Angels found that homeowners who settled claims from the 2025 wildfires lost an average of $668,000. For those with active claims, the average gap between insurance payouts and the cost of repairs currently exceeds $1 million.
Challenges to Expansion
While lawmakers see expansion as a necessary step, the FAIR Plan Association warns it is not currently prepared for such a shift. Victoria Roach, president of the association, said the FAIR Plan currently lacks the staff and technology to manage full policies, noting that the expansion would require new departments and a 30% to 50% rate increase.
The insurance industry has also expressed opposition. Terry McHale of Aaron Read & Associates argued against the proposal, saying the state-required plan unfairly competes with private insurance companies.
Historical Context
California originally created the FAIR Plan in 1968 to assist urban property owners. The state later expanded the plan's reach statewide following the insurance crisis caused by the 1994 Northridge earthquake.
Legislators are now deciding if a similar expansion is needed to protect residents. This comes as more private companies refuse to renew policies or stop doing business in California entirely.
