The California FAIR Plan, Explained (2026): Coverage, DIC Wrap Policies, and How to Get One
The California FAIR Plan only covers fire, smoke, lightning, and explosion, nothing else, which is why almost every mortgage lender also requires a second policy on top of it, and why only about half of FAIR Plan holders currently carry that second policy.
The California FAIR Plan, explained
What it actually covers, what it does not, and why most homeowners need a second policy on top of it
Quick answer
The FAIR Plan is not a government program. It is an industry-run insurance pool, regulated by the state, that every licensed home insurer in California is required to fund. It exists so homeowners in wildfire-prone areas are not left with zero coverage after being declined by the standard market, but it only insures fire-related damage, at actual cash value, up to $3 million residential.1
What it actually costs
The statewide average FAIR Plan premium was just over $3,000 a year as of September 2025 data, but the real number swings enormously by location, from as low as $92 a year to as high as $32,000 in the most fire-exposed ZIP codes.7 A few actual ZIP-level examples: Orinda in the Bay Area averages about $5,200 a year, the area around Geyserville north of Santa Rosa averages roughly $11,900, and the Big Sur coastline averages just over $11,000.8
A worked example. A $750,000 home in a Sierra foothill county with a high brush score might see a FAIR Plan dwelling premium of $4,000 to $6,000 a year on its own. Add the DIC wrap needed to restore liability, theft, and water damage coverage, and the combined bill lands around $5,500 to $9,000. The same home, if a standard insurer would still write it, might cost $1,800 to $3,000 for a comparable HO-3 policy, roughly two to three times less.9
There is one lever that directly lowers the bill: the FAIR Plan's wildfire hardening discount program lets policyholders stack up to 12 individual mitigation measures, things like a Class-A roof, a five-foot noncombustible zone around the home, and ember-resistant vents, for savings of up to 16.4 percent off the wildfire portion of the premium.9
What the FAIR Plan actually covers
| Included automatically | Available as an add-on | Not covered at all |
| Fire Smoke Lightning Internal explosion |
Vandalism and malicious mischief Windstorm and hail Riot Aircraft or vehicle impact |
Water damage Theft Liability Medical payments Additional living expenses |
A standard FAIR Plan policy also pays out on an actual cash value basis, meaning depreciation is subtracted from the payout, rather than the replacement cost basis most standard homeowners policies use.2
Why almost everyone pairs it with a second policy
Because the excluded list above includes basics like theft and liability, the FAIR Plan alone rarely satisfies a mortgage lender. The fix is a Difference in Conditions policy, usually called a DIC or a wrap policy, sold separately by a standard insurer. The DIC handles what the FAIR Plan does not: water damage, theft, liability, replacement cost coverage instead of actual cash value, and additional living expenses if you have to leave the home temporarily.3
The two policies do not share a contract with each other. You hold both separately, and so does your lender if you have a mortgage. California's Department of Insurance keeps a public list of admitted carriers that sell DIC policies designed to pair with the FAIR Plan.4 Despite how often a DIC is effectively required, the California Department of Insurance reports that only about one DIC policy is purchased for every two FAIR Plan policies, which means a meaningful share of FAIR Plan holders are covered for fire only.5
The brush clearance requirement insurers now check
California law requires 100 feet of defensible space, cleared vegetation, around structures in fire-prone zones, broken into three rings: Zone 0 from 0 to 5 feet demands a fully ember-resistant area, Zone 1 from 5 to 30 feet requires intensive fuel reduction, and Zone 2 from 30 to 100 feet needs ongoing vegetation management.10 Existing homes in Very High Fire Hazard Severity Zones must comply by January 1, 2027, and by January 1, 2028 in High Fire Hazard zones.11
This is not just a fire-department formality anymore. Insurers writing policies in fire zones increasingly request inspection photos as part of underwriting, and non-renewal letters citing uncleared brush have become common in high-risk ZIP codes.12 If you are on the FAIR Plan or trying to get back into the standard market, documented compliance with your local fire department's defensible space inspection is worth doing before you apply, not after a denial.
How fast this has grown
The FAIR Plan covered roughly 154,000 California homes in 2019. By the end of 2025 that number had grown to about 668,000, more than a fourfold increase in six years, as standard insurers pulled back from wildfire-exposed areas.5 The January 2025 Palisades and Eaton fires alone added an estimated 4.8 billion dollars in claim exposure to the program.6
That growth is now showing up in pricing. The FAIR Plan filed for an average rate increase of 35.8 percent in October 2025, pending regulatory approval for an effective date in 2026.6 If you are pricing a FAIR Plan policy this year, budget for a materially higher premium than what last year's policyholders paid.
FAIR Plan versus a standard HO-3 policy
| Feature | FAIR Plan alone | Standard HO-3 |
| Perils covered | Named perils only: fire, smoke, lightning, explosion | Open perils on the dwelling, broad coverage overall |
| Payout basis | Actual cash value, depreciation subtracted | Usually replacement cost |
| Liability coverage | Not included | Included |
| Theft and water damage | Not included | Included |
| Coverage cap | $3 million combined, residential | Varies by insurer, often higher |
| Typical statewide premium | About $3,000 to $3,200 a year7 | Often 2 to 3 times lower where available9 |
The FAIR Plan with a DIC wrap can approximate this list, but as two separate policies rather than one, and usually at a higher combined cost than a standard policy would have been.
How to actually get a policy
1. Get declined by the standard market first. The FAIR Plan is meant to be a backstop, not a first choice, so most agents will have you apply to standard insurers before this.
2. Document your defensible space compliance. Photograph your cleared Zone 0 through Zone 2 vegetation before you apply. Incomplete documentation is one of the most common causes of delay.
3. Apply through a licensed broker or agent. The FAIR Plan is not sold directly to consumers the way a standard insurer's website works.
4. Shop the DIC wrap at the same time. Get the FAIR Plan and DIC quoted together so you know your real total cost and real total coverage before you commit to either.
5. Ask about the wildfire hardening discount. Stacking mitigation measures can knock up to 16.4 percent off the wildfire portion of your premium, and treat the policy as temporary where possible by re-shopping the standard market at renewal.
Frequently asked questions
Is the California FAIR Plan a government program?
No. It is an industry-funded insurance pool that every licensed insurer doing business in California is required to support, and it is regulated, not run, by the state.
Do I have to be denied by multiple insurers first?
In practice yes, since the FAIR Plan is designed as a last resort. Your broker will typically show you the standard market declines before moving to a FAIR Plan application.
Can I get by with just the FAIR Plan and skip the DIC wrap?
You can, but you would have no coverage for theft, water damage, or liability, and most mortgage lenders will not accept FAIR Plan-only coverage as satisfying your loan's insurance requirement.
Why is my FAIR Plan quote so much higher than my old policy?
FAIR Plan pricing reflects wildfire risk more directly than many legacy standard policies did, and a pending 35.8 percent average rate increase is adding to that gap. Combined with a DIC wrap, the total often runs two to three times what a standard HO-3 would have cost in a lower-risk area.
Does clearing brush on my property actually affect my insurance?
Increasingly yes. Insurers are requesting defensible space inspection photos before underwriting, and documented, photographed compliance can be the difference between an approval and a non-renewal in high fire hazard zones.
Looking for savings on top of your policy? See our Hero Home Insurance Discounts by State guide, and if you ever need to escalate a claim dispute, our State Insurance Department Directory has the California Department of Insurance's direct contact information.
Sources and methodology
1. California Department of Insurance, California FAIR Plan overview, 2026, cited via Coverage Cat.
2. Coverage Cat, California FAIR Plan Insurance, 2026 update.
3. California FAIR Plan Association, Difference in Conditions overview, cfpnet.com.
4. California Department of Insurance, public list of DIC policy carriers, insurance.ca.gov.
5. Coverage Cat, Understanding Wrap-Around DIC Policies and the FAIR Plan, 2026.
6. Latent Insurance, California FAIR Plan: Coverage, Cost and Alternatives, 2026.
7. San Francisco Chronicle, California FAIR Plan premium map by ZIP code, using September 2025 FAIR Plan Association data.
8. San Francisco Chronicle, How much the California FAIR Plan costs in every ZIP code, 2025 to 2026.
9. Real Cost Report, California FAIR Plan Costs vs. Private Market 2026.
10. FireReadyHome, Defensible Space: The Complete CAL FIRE Guide (PRC 4291), 2026.
11. Ember Pro, California Wildfire Laws 2026: Complete Compliance Guide, on AB 3074 deadlines.
12. Iron Coast Equipment, Defensible Space Requirements San Diego County, 2026.
Coverage details, limits, and pricing reflect published information as of August 2026 and change as the FAIR Plan's pending rate filing and program rules are finalized. Confirm current terms directly with the FAIR Plan or a licensed broker before purchasing. This is not insurance advice.
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