A proposed bill that would expand coverage under California's insurer of last resort has drawn support from the state's insurance commissioner but opposition from industry trade groups, as the residual market's explosive growth and recent wildfire losses intensify debate over its long-term sustainability.
Assembly Bill 1680 would require the California FAIR Plan to include water damage, personal injury liability, and other coverages typically found in standard homeowners' policies.
Currently, FAIR Plan policyholders must purchase these coverages separately. Insurance Commissioner Ricardo Lara has sought to change this structure since 2019, according to the California Department of Insurance.
The legislative push comes as the FAIR Plan absorbs an increasingly large share of California's property insurance market. According to FAIR Plan data, exposure has increased 230% since December 2022, reaching $724 billion by year-end 2025.
The plan currently has slightly more than 668,000 policies in force, according to FAIR Plan President Victoria Roach (pictured above) – representing nearly 6% of the state's property insurance market, per an Assembly Insurance Committee analysis.
Roach testified at a legislative hearing that the FAIR Plan does not manage its exposure geographically, noting: "We have areas in the state where we may have 50% or more in the market for those areas."
The January 2025 wildfires further strained the plan's finances. According to Heffins, the FAIR Plan reported an estimated $4 billion in losses from the Palisades and Eaton fires – prompting a $1 billion assessment on insurers, half of which may be passed on to policyholders.
The American Property Casualty Insurance Association expressed opposition to the bill. Nicole Ganley, APCIA assistant vice president for public affairs, said expanding FAIR Plan policies to provide full HO3 coverage would be a "lose-lose" for the state.
She argued the expansion would be detrimental because it extends coverage through a plan that lacks the financial capacity to absorb the next major catastrophe – and that all other Californians would "inevitably be forced to absorb the cost of future FAIR Plan shortfalls."
The APCIA told lawmakers that increasing rates is key to depopulating the FAIR Plan. According to Insurance Business, the plan filed in autumn 2025 to raise home insurance rates by an average 35.8% – its largest increase in at least seven years.
The legislative push follows a December 2025 Court of Appeal ruling that the FAIR Plan cannot be compelled to add liability coverages through regulatory action, reversing a trial court order.
AB 1680 would also seek to improve a clearinghouse program designed to transition policyholders back to the admitted market. Under the program, private insurers receive policy data to determine if they can offer coverage – but the CDI said only some insurers participate, undermining the Legislature's intent.
Additional provisions would require the FAIR Plan to adopt climate risk assessments, align climate-related financial reporting with national standards, and make governing committee meetings public.
Assemblymember Lisa Calderon, sponsor of the bill, said Californians do not want to be non-renewed – but if they are, comprehensive coverage must be available.
