The heavily wooded hills in Orinda have forced many homeowners to look to FAIR, the state’s insurer of last resort, for coverage. But now FAIR has asked to raise its already much higher rates by as much as 35 percent.
At least 1,200 Orinda homeowners would be looking at a 35.8% increase in their already pricey FAIR plan fire insurance rates if a proposed rate bump is approved by the state.
The California FAIR Plan is the insurer of last resort for homeowners who cannot get private insurance, and wildfire risks have caused many private insurers to drop coverage for Orinda homes. In September 2023, there were 340 FAIR policies in Orinda but that number jumped to 1,200 by September 2024 – and many more homeowners have been forced to move to the more expensive FAIR option in the past year.
But expensive insurance is better than none, and FAIR ensures that state residents have access to basic property coverage when none is available. Close to 560,000 FAIR homeowner policies had been issued by March, according to the state Department of Insurance, and that number has increased in the past seven months.
The FAIR Plan submitted a dwelling rate filing to the California Department of Insurance on Sept. 29, seeking an overall increase of 35.8%. As of June, FAIR’s risk exposure was $650 billion. In 2021, it was $167 billion.
The insurer’s latest rate filing follows new state-established Sustainable Insurance Strategy (SIS) guidelines using approved catastrophe modeling. Those guidelines also account for the net cost of reinsurance.
“Use of the rate guidelines prior to the SIS would have resulted in the FAIR Plan seeking an 80% rate increase,” said California FAIR Plan spokesperson Hilary McLean.
The latest FAIR Plan dwelling fire rate manual lists the average percent of rate impact on Orinda at just under 38%, with an average rate increase of just over $2,100. The maximum rate impact tops out at just over $13,000.
Orinda’s situation is also faced by other nearby communities. Homes in Lafayette’s 94549 zip code also saw a huge jump in FAIR coverage – just over 262% from 2023 to 2024.
If FAIR’s rate increase is approved, “it does not mean every customer would see their premium rise by this amount,” said McLean. She said, however, the largest component of the increase is connected to the wildfire portion of a policyholder’s premium and of course wildfire risk is the primary reason private insurers have been cancelling policies in Orinda.
State law requires FAIR to adjust its rates every two years, and even though FAIR is not a state entity, California requires that rates must be able to cover anticipated claims and expenses.
Fire-Safe Moraga-Orinda has offered grants to residents who collaborate with neighbors on home hardening efforts, and the FAIR Plan also gives a leg up to homeowners making changes to help protect their homes from wildfire.
Compliance with all of FAIR’s listed criteria, including an ember-resistant perimeter around a dwelling and the clearing of vegetation and debris, means a discount of up to 14.5% on the wildfire portion of their premiums.
Additionally, policyholders with properties in a designated Firewise USA Community could also see a 10% discount.
When it comes to the projected rate increases faced by Orinda residents, McLean emphasized that “while [the numbers] reflect the average change, individual policies may vary, depending on the risk characteristics of the property.”
