This article first appeared in the CAI Coachella Valley’s HOA Living Magazine, August 2025 Issue.
The California FAIR Plan is a last-resort insurance program designed for property owners who are unable to obtain homeowners insurance through the standard market. Created by the state, the pro-gram ensures that all Californians have access to basic fire insurance, particularly those in high-risk areas such as wildfire zones.
Beginning July 26, 2025, the California FAIR Plan will introduce several important updates to its commercial insurance coverage. These changes primarily affect larger properties and policies with higher insured values.
TWO TYPES OF COMMERCIAL POLICIES
1. Standard Commercial (COM) Policies – For properties valued at $20 million or less.
2. Commercial High Value (CHV) Policies – For properties with a total value over $20 million.
CHV policies will be available on or after July 26, 2025. If a property currently insured under a COM policy qualifies for a CHV policy, the COM policy must be canceled and rewritten as a new CHV policy (with a new application and policy number) to access the higher coverage limits.
COVERAGE LIMITS
• The maximum coverage per building is increasing to $20 million.
•The total maximum coverage per location, including multiple buildings, is $100 million.
DEDUCTIBLES (WHAT YOU PAY IN A CLAIM)
•COM Policies: Now offer both flat-dollar deductibles (e.g., $1,000 or $5,000) and new percentage-based options (from 1% to 15% of the insured value).
• CHV Policies:
• For fire coverage, deductibles start at 5%.
• For all other risks, deductibles range from 1% to 15%.
• These are based on the total insured value, meaning the deductible amount can be substantial for high-value properties.
Some property types—such as public buildings, schools, condominium associations, and buildings under construction—have mandatory minimum deductibles. These vary depending on whether the policy is a COM or CHV policy.
NEW FEES AND CHARGES
• CHV policies will include a Temporary Supplemental Fee, based on the property’s
wild-fire risk and the amount of coverage exceeding $20 million.
• Properties that receive unsatisfactory safety inspections may incur an additional 23% surcharge.
APPLICATION UPDATES
The insurance application is being revised to collect more detailed information, including:
• Whether the building is equipped with sprinklers
• The building’s occupancy status (70% or more vacant is considered
“substantially va-cant”)
• Any excess or secondary insurance on the property
• A full list of owners or entities with an ownership interest
FORMS AND POLICY DOCUMENTS
Several forms are being updated or added to clarify policy language. Policy documents will now include more detailed breakdowns of deductibles, fees, and wildfire premiums.
This article first appeared in the CAI Coachella Valley’s HOA Living Magazine, August 2025 Issue.
The California FAIR Plan is a last-resort insurance program designed for property owners who are
unable to obtain homeowners insurance through the standard market. Created
by the state, the pro-gram ensures that all Californians have access to basic fire insurance, particularly those in high-risk areas such as wildfire zones.
CHV POLICY END DATE
CHV policies will only be available through July 26, 2028. After that date:
• No new or renewal CHV policies will be issued.
• Existing CHV policies will not be renewed upon expiration.
• Any unused fees will be refunded with interest, no later than two years after the final claim is closed.
DISCLAIMER
The California FAIR Plan serves as the state’s insurer of last resort. Property owners are strongly encouraged to explore insurance options in the standard market whenever possible, both for new coverage and for any risks currently insured under the FAIR Plan.