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Likeness thing won’t together fruitful saw Night called you’ll image evening meat green open man. Multiply hath life own days third yielding grass lights male shed earth morning one.
Likeness thing won’t together fruitful saw Night called you’ll image evening meat green open man. Multiply hath life own days third yielding grass lights male shed earth morning one.
A recent bulletin from the California Department of Insurance reveals a critical update that affects homebuyers, property owners, and real estate investors alike. If California’s FAIR Plan, the state’s insurer of last resort for wildfire insurance, runs out of money following a catastrophic wildfire, it could charge a surcharge to all policyholders, even those whose properties weren’t damaged.
This change has serious implications for anyone buying, owning, or investing in real estate in California, especially in wildfire-prone regions.
The California FAIR Plan provides insurance to property owners who are unable to get coverage through traditional insurers due to wildfire risk. The plan is backed by all major insurance companies operating in California, including State Farm and Allstate.
Under the newly clarified terms:
This means that even if your home or investment property is not damaged by a wildfire, you could still be billed to help cover statewide insurance losses.
As of June 30, the FAIR Plan had expanded to cover more than 419,000 properties, making it one of the largest insurers in the state. Its total risk exposure reached nearly $400 billion, a 26% increase in just six months. This dramatic growth shows how dependent property owners have become on the FAIR Plan as private insurers retreat from high-risk areas.
If You’re Applying for a Mortgage:
Many lenders require proof of adequate insurance to finalize a mortgage. If the only available option is the FAIR Plan, especially in high-risk fire zones, your monthly payment could be much higher than expected. Future surcharges could further increase your cost of ownership.
If You’re a Homeowner in California:
You may already be covered under the FAIR Plan without realizing it. Even if you don’t live in a wildfire area, a statewide surcharge could still affect your bill.
If you’re a Real Estate Investor:
Surcharges, rising premiums, and limited policy options can directly impact profitability and cash flow. This development also adds a new layer of complexity to acquisitions and long-term hold strategies.
Check whether your current or target property is located in a wildfire-prone area. Use tools like CAL FIRE’s Fire Hazard Severity Zone map to evaluate risk.
If you already use the FAIR Plan, review what it does and doesn’t cover. Many insurers exclude liability, theft, or water damage unless you add supplemental coverage.
Even if you’re not impacted today, future surcharges could raise your costs. Adjust your monthly and annual budgets accordingly, especially if you’re financing a new property.
If your portfolio is heavily concentrated in wildfire zones, consider exploring properties in lower-risk areas to balance your exposure.
Understanding how insurance shifts affect your financing, closing, and returns is critical. A financial partner that specializes in real estate can make a real difference.
At Scout Financial, we guide real estate clients, buyers, and investors through California’s evolving property landscape. Whether you’re applying for a mortgage or expanding your portfolio, our team helps you:
The wildfire insurance landscape is shifting, and costs are rising. If you’re preparing to buy, already own, or plan to invest in California real estate, it’s time to plan.
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