California Fair Plan outlines major changes to residential and commercial coverage

The Assembly Insurance Committee meeting held on May 28, 2025, focused on significant changes to California's FAIR Plan, which provides insurance coverage for high-risk properties. Key discussions included adjustments to coverage limits and ongoing legislative efforts aimed at expanding the plan's offerings.

One of the most notable changes discussed was the increase in residential dwelling limits under the FAIR Plan. The limits will rise from $1.5 million to $3 million, reflecting a response to the evolving needs of homeowners. Additionally, commercial coverage limits are set to see a substantial increase, moving from $20 million per location to $100 million per location by mid-July 2025. This change comes after requests from the California Building Industry Association (CBIA) for enhanced coverage on commercial projects.

The committee also addressed pending orders from the California Department of Insurance (CDI) that would require the FAIR Plan to provide coverage for homeowners similar to that of the private market. This order is still awaiting finalization.

In terms of legislative developments, two bills are currently in progress: AB 290, which aims to extend grace periods for policy renewals, and SB 525, which seeks to ensure replacement coverage for manufactured homes and mobile homes. These initiatives indicate a potential expansion of the FAIR Plan's scope in the coming years.

The meeting highlighted the FAIR Plan's growth trajectory since 2018, with an annual growth rate between 8% and 11%. This growth is particularly significant for a residual market, suggesting a robust demand for the coverage provided by the FAIR Plan.

Overall, the discussions at the meeting underscored the ongoing efforts to adapt California's insurance landscape to better serve high-risk homeowners and commercial property owners, with several legislative measures poised to enhance coverage options in the near future.