The FAIR Plan Claims Process: What 610,000 Policyholders Need to Know

The California FAIR Plan is now the largest property insurer in the state by policy count, with more than 610,000 active policies as of late 2025 — a 43 percent increase from September 2024 to December 2025. What was originally designed as a temporary insurer of last resort for a small number of high-risk properties has become the primary fire insurance option for hundreds of thousands of California homeowners. The January 2025 Los Angeles wildfires inflicted approximately $4 billion in losses on the FAIR Plan alone, straining an organization that was never built to handle catastrophic events of this magnitude.

For policyholders navigating a FAIR Plan claim, the process is different from dealing with a traditional insurance company — and the coverage gaps are far more severe than most homeowners realize. This guide covers how to file a FAIR Plan claim, what to expect during the process, what the FAIR Plan does and does not cover, and why supplemental coverage is not optional but essential.

Filing a FAIR Plan Claim: The Process

Filing a claim with the FAIR Plan follows the same general framework as any property insurance claim, but with some important differences in how the process is managed and who handles the file.

Step 1: Report the Loss Promptly

Contact the FAIR Plan as soon as possible after a loss. The FAIR Plan accepts claims by phone and through its website. Have the policy number, date of loss, and a brief description of the damage ready. As with any property insurance claim, prompt reporting is important both to comply with policy conditions and to begin the documentation process.

Step 2: Document Everything

Thorough documentation is critical for FAIR Plan claims. Photograph and video all damage before any cleanup or temporary repairs. Save receipts for all emergency expenses including hotel stays, meals, and temporary repairs. Create a written inventory of damaged or destroyed personal property with descriptions, approximate ages, and estimated values. The FAIR Plan, like any insurer, will require documentation to support every element of the claim.

Step 3: Understand the Adjuster Assignment

The FAIR Plan does not maintain its own staff of field adjusters in the way that large carriers do. Instead, it contracts with independent adjusting firms and third-party administrators to handle claims. This means the adjuster assigned to a FAIR Plan claim may be handling files for multiple carriers simultaneously and may not be deeply familiar with FAIR Plan-specific policy provisions. Policyholders should not assume the assigned adjuster is an expert on what the FAIR Plan policy does and does not cover.

Step 4: Request Advance Payments

California regulations require insurers, including the FAIR Plan, to provide advance payments when liability is reasonably clear. If a wildfire destroyed a home and the FAIR Plan policy was in force, there should be no dispute about whether the loss is covered. Policyholders should request advance payments for additional living expenses and partial dwelling payments as soon as possible. Do not wait for the full adjustment to be completed before asking for money to cover immediate needs.

Step 5: Coordinate with the DIC Carrier

If a Difference in Conditions (DIC) policy is in place, coordinating between the FAIR Plan and the DIC carrier is one of the most important — and most complex — aspects of the claim. The DIC policy typically sits on top of the FAIR Plan and covers perils and amounts that the FAIR Plan does not. The two policies must be adjusted together to maximize the total recovery.

What the FAIR Plan Covers

The FAIR Plan’s coverage is narrow by design. The standard FAIR Plan homeowner policy covers:

• Fire— including wildfire, which is the primary reason most policyholders are on the FAIR Plan
• Lightning
• Internal explosion
• Smoke damage— from a hostile fire (not smoke from fireplaces, cooking, or industrial sources)

Optional endorsements are available for windstorm, hail, vandalism, and extended coverage perils (riot, civil commotion, aircraft, vehicles, volcanic eruption). These endorsements add cost but are worth considering depending on the property’s risk profile.

What the FAIR Plan Does NOT Cover

The exclusions in a FAIR Plan policy are extensive, and they represent the most dangerous coverage gaps for California homeowners:

• No personal liability coverage. If someone is injured on the property, the FAIR Plan provides zero liability protection. A separate liability policy is essential.
• No theft coverage. Burglary, robbery, and theft of personal property are not covered.
• No water damage coverage. Burst pipes, appliance leaks, rain intrusion, and other water-related damage are excluded.
• No tree or falling object damage. Damage caused by trees, branches, or other objects falling on the property is not covered under the basic form.
• Limited additional living expenses (ALE) in the basic form. The base FAIR Plan policy either excludes ALE entirely or provides only minimal coverage. An ALE endorsement may be available but typically at lower limits than a standard homeowner policy.
• No replacement cost valuation in the basic form.The base FAIR Plan policy pays on an actual cash value (ACV) basis — meaning damaged property is valued after depreciation. A replacement cost endorsement may be available, but policyholders must specifically request and pay for it. Without replacement cost coverage, the gap between what the insurer pays and what it actually costs to rebuild can be enormous.
• No ordinance or law coverage. If the home must be rebuilt to current building codes (which is almost always the case after a total loss), the additional cost of code compliance is not covered.

The $3 Million Residential Cap

The FAIR Plan’s maximum dwelling coverage for residential properties is $3 million. While this may seem adequate for many homes, it falls short for higher-value properties in coastal, hillside, and urban areas where rebuild costs can exceed this limit significantly. Properties in wildfire-prone areas of Los Angeles, the Bay Area, and other high-cost California markets may have replacement costs that approach or exceed $3 million — particularly when factoring in current construction costs, demand surge pricing after a catastrophe, and code upgrade requirements.

Policyholders with homes valued above $3 million must secure excess coverage from another source to avoid being underinsured after a wildfire. The surplus lines market may offer options, but availability and pricing fluctuate significantly based on market conditions.

The Current Crisis: Growth, Losses, and Rate Increases

The FAIR Plan was never designed to be a major insurance carrier. It was created in 1968 as a temporary backstop, a pool of last resort for properties that the private market would not insure. But as major carriers have withdrawn from California or drastically reduced their wildfire-zone exposure, the FAIR Plan has absorbed an enormous and growing share of the state’s fire insurance market.

The numbers tell the story:

• 610,000+ active policies as of late 2025, up 43 percent from September 2024 to December 2025
• $4 billion in estimated losses from the January 2025 Los Angeles wildfires alone
• A 36 percent rate increasepending regulatory approval, reflecting the FAIR Plan’s deteriorating financial position

The California insurance crisis has transformed the FAIR Plan from a niche product into a necessity for hundreds of thousands of families. This rapid growth has strained the FAIR Plan’s administrative capacity, its claims handling infrastructure, and its financial reserves. Policyholders who file claims during catastrophic events may face longer wait times, less experienced adjusters, and more aggressive claims handling as the organization struggles to manage an unprecedented volume of losses.

CDI Examination Findings: Systemic Claims Handling Failures

The California Department of Insurance (CDI) has conducted examinations of the FAIR Plan’s claims handling practices and identified systemic failures that affect policyholders across the board. These findings include:

• Delays in claim acknowledgment and investigation.The FAIR Plan has been cited for failing to acknowledge claims within the timeframes required by California’s Fair Claims Settlement Practices Regulations.
• Inadequate communication with policyholders. CDI found that policyholders were not being kept informed of the status of their claims or the reasons for delays.
• Insufficient advance payments. Despite regulatory requirements to provide advance payments when liability is reasonably clear, the FAIR Plan was found to be slow in issuing these payments to policyholders displaced by covered losses.
• Inconsistent claim valuations. CDI identified concerns about the consistency and accuracy of damage assessments, particularly in catastrophic loss situations where the FAIR Plan was relying heavily on third-party adjusting firms.

These findings reinforce the importance of policyholders being proactive in documenting their claims, requesting payments in writing, and keeping detailed records of all communications with the FAIR Plan and its adjusters.

Legislative Reforms: AB 1680 and AB 226

AB 1680: The Make It FAIR Act

Assembly Bill 1680, known as the Make It FAIR Act, represents a significant effort to reform the FAIR Plan and expand its coverage options. The legislation addresses several of the most critical gaps in FAIR Plan coverage, including:

• Requiring the FAIR Plan to offer a comprehensive homeowner policy option that more closely resembles standard market coverage
• Expanding coverage to include perils currently excluded from the basic FAIR Plan form
• Strengthening claims handling standards and timelines specific to the FAIR Plan
• Addressing the FAIR Plan’s governance structure and accountability to policyholders

If enacted as proposed, AB 1680 would fundamentally change the FAIR Plan from a bare-bones fire policy into something closer to actual homeowner insurance. This would reduce (though not eliminate) the need for a separate DIC policy and would provide meaningful additional protection for the hundreds of thousands of families currently relying on the FAIR Plan as their only fire coverage.

AB 226

Assembly Bill 226 addresses FAIR Plan reforms from a different angle, focusing on the financial structure of the FAIR Plan, its assessment authority (how it charges admitted carriers for losses that exceed its reserves), and its rate-setting process. AB 226 is particularly relevant to the question of how the FAIR Plan will fund its growing obligations without imposing unsustainable rate increases on policyholders or destabilizing the admitted insurance market through excessive assessments.

The Critical Need for a DIC Policy

Given the FAIR Plan’s extensive coverage limitations, a Difference in Conditions (DIC) policy is not a luxury — it is a necessity for any homeowner relying on the FAIR Plan. A DIC policy fills in the gaps by providing coverage for perils and amounts that the FAIR Plan excludes:

• Theft, water damage, and liability— the most significant perils excluded from the FAIR Plan
• Replacement cost coverage— if the FAIR Plan policy is on an ACV basis, the DIC policy can provide the replacement cost difference
• Additional living expenses— at limits more consistent with what a standard homeowner policy would provide
• Personal property at replacement cost— instead of the FAIR Plan’s ACV-only basis
• Ordinance or law coverage— for code upgrade costs

Practical Strategies for FAIR Plan Policyholders

• Review the FAIR Plan policy carefully. Do not assume it covers what a standard homeowner policy covers. Read the declarations page and the policy form to understand exactly what is and is not covered.
• Obtain a DIC policy. Work with a broker experienced in the surplus lines market to find a DIC policy that complements the FAIR Plan coverage. Ensure the DIC policy coordinates properly with the FAIR Plan.
• Document property values annually. With a 36 percent rate increase pending and construction costs continuing to rise, ensure coverage limits reflect current replacement costs. Being underinsured on the FAIR Plan while paying higher premiums is the worst of both outcomes.
• Keep checking the private market. The FAIR Plan should be a last resort, not a permanent solution. Have a broker re-check the admitted and surplus lines markets annually for alternatives. The surplus lines market may offer options that were not available when the FAIR Plan policy was first purchased.
• File claims promptly and document aggressively.Given CDI’s findings about the FAIR Plan’s claims handling deficiencies, policyholders cannot afford to be passive. Report losses immediately, follow up in writing, request advance payments explicitly, and keep records of every communication.

Key Takeaways

• The FAIR Plan covers fire and a few named perils only. It is not comprehensive homeowner insurance.
• Critical exclusions include liability, theft, water damage, tree damage, and (in the basic form) replacement cost valuation and adequate ALE.
• The $3 million residential cap may be insufficient for high-value homes, particularly in high-cost California markets.
• CDI has identified systemic claims handling failures. Policyholders must be proactive in documenting and pursuing their claims.
• AB 1680 and AB 226 may bring meaningful reforms, but legislation takes time. Current policyholders must plan based on the FAIR Plan as it exists today.
• A DIC policy is not optional. Without one, a FAIR Plan policyholder has coverage gaps that a standard homeowner would never accept.