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FAIR Plan Rates Up 29%: What Landlords Should Check

Real Umbrella

If you own a rental in California and it's on the FAIR Plan, look at the date on your next renewal.

On October 15, new FAIR Plan dwelling rates took effect. The average increase is about 29%. Owners in high fire-risk areas will see more than that. A few will see less.

That's the headline. The part that costs landlords real money is what the policy still doesn't cover.

What the FAIR Plan covers on a rental

The FAIR Plan was built as a fire policy, and it still mostly is one. The base policy covers fire, lightning, smoke and internal explosion. Wind, hail and vandalism are add-ons.

What it doesn't cover:

  • Liability. A tenant's guest trips on a loose stair tread and sues you. The FAIR Plan pays nothing.
  • Water damage from a burst pipe or a failed supply line.
  • Theft.
  • Flood and earthquake.

Two more details catch people. Replacement cost isn't automatic. Without it, a claim pays actual cash value, which takes depreciation off an older building. And everything on the policy combined tops out at $3 million.

The claim that actually happens

Fires make the news. Water is what rental owners actually call about. An LA agent who insures apartment buildings put it plainly in a BiggerPockets thread this fall: on older rentals, water is the most common claim.

Picture a 1970s duplex in Concord. The supply line under the upstairs bathroom sink lets go on a Friday night. By Monday, water has come through the downstairs ceiling. You need a plumber, drywall, flooring, maybe mold work. The downstairs unit sits empty for three weeks.

None of that is a fire. On a FAIR Plan policy alone, you're likely paying for all of it yourself.

Before you pay the renewal

  1. Ask for the wildfire mitigation discount. The FAIR Plan now discounts the wildfire part of the premium for things like a Class A roof, enclosed eaves, ember-resistant vents and a five-foot noncombustible zone around the building. One agency puts it at about 14% of that portion. If you've done the work, have the photos and receipts ready.
  2. Check for replacement cost. If your declarations page says "actual cash value," ask what replacement cost would add. On an older building, the gap between the two can be most of the claim.
  3. Price a DIC policy. A difference-in-conditions policy, sometimes called a wrap, picks up what FAIR leaves out: liability, water, theft. The FAIR Plan doesn't sell it, so it comes from a separate company. Make sure the two policies are written to fit together, or a water claim can turn into an argument about whose policy pays.
  4. Shop the whole thing again. Being on FAIR last year doesn't mean you have to be this year. Some landlord programs write one policy that covers fire, liability and water together. Put that next to FAIR plus a DIC and compare the total.

About State Farm coming back

You may have seen that State Farm filed to take new customers in California again, its first time since May 2023, and that Allstate filed a similar plan. Both are still under review. Both announcements are about homeowners policies. Neither mentions rentals.

If you're waiting for a big carrier to come back for your duplex, don't plan this renewal around it.

Real Umbrella insures California rental properties. If you want to see what a single landlord policy would cost for your building, get an estimate. It's online and takes a few minutes.

Sources

FAIR Plan Rates Up 29%: What Landlords Should Check — Real Umbrella