09/15/2026
California’s home insurance market is changing again, with higher rates arriving for many policyholders and some early signs that coverage options may be expanding.
The most immediate change involves California’s FAIR Plan, the state’s insurer of last resort. Beginning October 15, 2026, rates will increase by an average of 29.1% as policies are issued or renewed. The change affects more than 675,000 FAIR Plan customers statewide and is the Plan’s largest rate increase in recent history.
But 29.1% is a statewide average. It does not mean every California homeowner, or even every FAIR Plan policyholder, will receive that exact increase.
Some homeowners in areas with high wildfire risk could see the wildfire portion of their premium double. Lower-risk policyholders in urban Bay Area communities could see smaller increases or even reductions.
Here in Silicon Valley, flatter urban areas such as Sunnyvale, Santa Clara, Foster City and many San Jose neighborhoods may fall toward the lower-risk end. Properties near foothills or open space in Los Altos Hills, Portola Valley, Woodside, the hills above Saratoga and Los Gatos, Almaden, Monte Sereno and the Skyline corridor may face higher exposure.
These are broad geographic patterns, not insurance classifications. Risk, eligibility and pricing can vary by address, property and insurer.
The FAIR Plan is not the only part of the market experiencing changes. State Farm’s homeowners rates increased 17% in June 2025. A March 2026 settlement kept that increase in place rather than allowing the 30% increase the company had sought.
The settlement also reduced increases for some other State Farm customers:
• Rental dwelling policies: from a 38% interim increase to 32.8%
• Condominium policies: from 15% to approximately 5.8%
Because the higher interim rates had already been charged, affected policyholders will receive refunds plus 10% interest, retroactive to June 1, 2025.
Years of wildfire losses and rising rebuilding costs led private insurers to pull back and pushed more property owners onto the FAIR Plan. Its total insured exposure reached $768 billion in June 2026, up 250% since September 2022.
There are some early signs of improvement. Travelers, AAA SoCal, Farmers and Allstate have taken steps toward expanding homeowners insurance availability in California. FAIR Plan enrollment continues to grow, but at a considerably slower pace.
For buyers, this means investigating insurance availability and cost early, ideally before writing an offer. For homeowners, it means reviewing renewal notices carefully, asking about wildfire-mitigation discounts and comparing the coverage provided along with the premium.
Insurance has become a meaningful part of the affordability calculation. If you are planning a move, let’s factor it in before you are in contract.
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Nancy Dinshaw
Broker Associate | DRE #01924283
📲 (650) 549-5539
📧 [email protected]
🌐 liveinthebay.com
Sources: California Department of Insurance, California FAIR Plan and KQED.
For guidance about a specific property or policy, consult a licensed insurance professional.
