Starting January 10, 2026, many homeowners in California will notice a new charge added to their property insurance bills. This change stems from the aftermath of the devastating January 2025 wildfires that swept through Southern California, causing an estimated $4 billion in damages. In response, the California FAIR Plan, which acts as the state’s insurance safety net, issued its first major assessment on insurers in over 30 years.
What Is the FAIR Plan and Why Is This Happening?
The FAIR Plan is a state-mandated insurance pool that provides basic property insurance to residents who can’t get coverage through regular carriers, often due to wildfire risk. When the FAIR Plan’s own resources get overwhelmed by catastrophic events, it can assess its member insurers to cover shortfalls. That’s exactly what happened following the Palisades and Eaton fires in January 2025.
These fires destroyed hundreds of homes and led to 4,794 claims, pushing the FAIR Plan’s financial limits. To stay afloat and continue paying claims, the plan issued a $1 billion assessment to all insurers doing property business in the state. Under California law, these insurers can request approval from the Insurance Commissioner to recover some of that cost from their own policyholders.
Travelers Will Add a 1% Surcharge
Travelers, one of the largest home insurers in California, has already received approval to recover part of its FAIR Plan assessment. Starting January 10, 2026, all new and renewing Travelers property insurance policies in California will include a temporary surcharge of about 1% of the policy premium. This extra charge will appear clearly on the policyholder’s Declarations page and billing statements.
This isn’t technically considered “premium” by the state, nor will it count as a loss when insurers file future rate requests. It’s simply a temporary supplemental fee to help the insurer recoup part of what it paid into the FAIR Plan.
Are Other Carriers Doing the Same?
Yes. While Travelers is the first to publicly confirm the surcharge, the updated guidance in California Insurance Bulletin 2025-4 makes it clear that all property insurers who paid into the FAIR Plan are allowed to seek partial reimbursement from their customers, but only with approval. Many large carriers are expected to follow suit.
Some insurers may pass along 1% or more, depending on the size of their FAIR Plan bill and how they choose to split that cost across their policyholders. The actual surcharge could vary based on the type of property insurance, whether it’s for homeowners, renters, mobile homes, or condominiums.
At the time of writing, no other major insurers have confirmed their exact surcharge rates, but applications are due within six months of receiving an assessment notice. Expect announcements from other carriers in the months ahead.
Why This Matters
This is a big deal for California homeowners, especially those who’ve already seen insurance costs rise sharply due to wildfire risk. While 1% may not sound like much, it’s another layer of cost in an already expensive insurance market.
More importantly, this move highlights a growing shift in how California handles disaster recovery costs. With climate change driving more intense wildfires, the state’s insurance system is under pressure. The FAIR Plan is supposed to be a backstop, but when that backstop needs a bailout, the cost trickles back down to consumers.
What You Should Do
Review your policy: When it renews after January 10, 2026, check for any new line items labeled “Temporary Supplemental Fee” or similar.
Ask your agent: If you’re with Travelers or another major insurer, ask whether the surcharge will apply to your policy and how much it’ll be.
Shop around: If you’re unhappy with the added costs, this might be a good time to compare policies. Just be aware that most carriers doing business in California will face the same surcharge. Want to get a quote from us – fill out homeowners insurance application and get our quotes
Stay informed: The Department of Insurance may update rules or release new guidance as more insurers seek approval for surcharges.
This isn’t a hidden fee or a rate hike. It’s a structured, state-approved way for insurers to recover some of their wildfire-related losses through a temporary surcharge. While frustrating, it’s part of a bigger effort to keep the California insurance market functional and prevent more carriers from pulling out of high-risk areas.
If you have questions, now’s the time to talk to your agent or broker. They can explain how your specific policy might be affected and what options you have. If you’re a California homeowner, talk to your insurance provider or broker today. Get clear on what changes are coming and how they might affect your next renewal.
