California’s FAIR Plan — Huge Rate Increases & State Farm Wants to Recoup Assessment
Published October 14, 2025 at 1:55 PM · News Releases and Bulletins
California’s FAIR Plan has sent a proposal to the California Department of Insurance for permission to raise homeowners insurance rates by 35.8%. If given permission, the rate increases will go into effect on the first renewal date after April 1st of next year.
As with most insurance, the rate hikes affect different people differently. The FAIR Plan proposal shows people in low-risk areas like the Central Valley will see lower rates. Those in the high risk areas like Sonoma County and the Sierra Nevada foothills will see large increases.
Risk is the primary reason for the increases and it notes about half of the FAIR Plan customers will see a jump of 40% to 55%. Some could see their rate go as high as 78%.
There are four properties insured by the FAIR Plan that will see a rate increase of a staggering 300%.
Will the FAIR Plan get what it wants? Maybe. Maybe not. In 2021 a rate request of 48.8% turned into one averaging 15.7%.
In other news related to the FAIR Plan, State Farm wants to get the $165 million it was assessed when California Insurance Commissioner Ricardo Lara imposed a $1 billion assessment on insurance companies doing homeowners business in the state.
The assessment was to pump up the FAIR Plan’s depleted coffers.
State Farm says it will recoup the money through a fee attached to homeowners insurance premiums. “For Homeowners and Rental Dwelling policies, the fee is 1.13% each renewal for two renewal periods,” State Farm said. “For other personal lines policies, the fee is 2.25% for one renewal period. For commercial policies, the fee is 0.26% for one renewal period. Customers will begin to see the temporary supplemental fee on policy renewals effective Dec. 1, 2025, for personal lines and Jan. 1, 2026, for commercial lines.”
The fee — of course — must be approved by the California Department of Insurance before State Farm can put it into play.
Source link: Insurance Business America — https://bit.ly/4qc07bZ
Source link: Sacramento Bee — https://bit.ly/3KNJbsk
Source link: Insurance Journal — https://bit.ly/3J8Ra2y