Trusted by property owners and tenants across Southern California. We deliver exceptional property management with a personal touch.
Focused Portfolio
Owner-Operated
Managing the South Bay
Published July 15, 2026
The California Department of Insurance approved a statewide average 29.1% FAIR Plan rate hike for 2026, and it is not just fire-zone properties.
The California Department of Insurance approved a statewide average 29.1% FAIR Plan rate increase effective October 15, 2026, down from the 35.8% the FAIR Plan originally requested. It applies broadly, not only in mapped wildfire zones, because the FAIR Plan prices risk across its entire book. FAIR Plan policies also cover property damage only, so a South Bay landlord still needs a separate liability or Difference in Conditions (DIC) policy to avoid a real coverage gap.
Between 2020 and 2022 alone, California insurers declined to renew about 2.8 million homeowners policies statewide, including roughly 531,000 in Los Angeles County, per California Department of Insurance policy count data, and the FAIR Plan, the state's insurer of last resort, absorbed much of that displaced risk. The FAIR Plan's own published statistics show 684,388 policies in force as of March 2026, a 152% increase since September 2022. That growth is the mechanism behind the rate increase: the FAIR Plan spreads the cost of insuring an enlarged, higher-risk pool across all of its policyholders, not just the ones in the highest-risk zip codes.
The result is that a South Bay landlord in El Segundo, Hermosa Beach, or Redondo Beach, nowhere near a wildfire interface, can still see a real premium increase on a FAIR Plan policy simply because the statewide pool got bigger and riskier. The 29.1% figure is a statewide average, not a uniform increase. The largest component of the increase is the wildfire portion of the premium, so properties with higher wildfire risk scores will see increases above the average, some can see their wildfire premium roughly double, and some lower-risk policyholders will see smaller increases or even a decrease. What any specific property pays depends on its individual risk score, so the renewal quote is the only number to trust.
After the January 2025 Palisades and Eaton fires, the Insurance Commissioner imposed a mandatory one-year moratorium under SB 824 barring non-renewals in the affected and adjacent zip codes, covering 12 Palisades-area and 23 Eaton-area zip codes. That moratorium expired January 7, 2026. Insurers in those zones can now issue non-renewals again, subject to standard advance notice requirements. If your property sits in or near one of those zip codes and you were shielded from a non-renewal in 2025, that protection has run out, and it is worth confirming your policy status now rather than waiting for a renewal notice.
A FAIR Plan policy is a property-only policy. It does not include personal liability coverage, medical payments to others, or damage to other people's property, and it does not cover water damage, theft, or vandalism the way a standard homeowners or landlord policy does. For a rental property, that gap matters more than it does for an owner-occupied home, since a landlord's liability exposure from a tenant injury or a burst pipe does not disappear just because the property is insured under the FAIR Plan. Owners who end up on the FAIR Plan need a companion Difference in Conditions (DIC) policy to wrap liability, water damage, theft, and loss-of-use coverage around the FAIR Plan's fire-only base, or they are carrying a real, uninsured exposure on a rental asset.
For rental property, FAIR Plan and DIC premiums are an ordinary and necessary cost of operating the property, and are deductible as a business operating expense under IRC Section 162, the same as any other property insurance premium, per IRS guidance in Publication 527 for residential rental property. That does not offset the cash flow hit of a 30% to 50% premium increase, but it does mean the higher premium reduces taxable rental income dollar for dollar, which is worth factoring into a 2026 tax projection rather than treating the increase as a pure loss.
If you are on the FAIR Plan or are being pushed toward it after a non-renewal, budget for a real premium increase this year, not a marginal one, and do not assume you are protected just because your property is not in a mapped high-severity fire zone. Confirm you have a DIC policy layered on top of any FAIR Plan coverage so liability and water damage are not silent gaps. If your property sits in a zip code that was under the SB 824 moratorium, check your renewal status now that the shield has lapsed.
If you would rather have someone flag insurance changes like this before they show up as a surprise on your P&L, that is part of what we watch for our owners.
This is general information, not legal or tax advice. Confirm with a licensed professional before you act.
Last verified: July 2026.
Topics: compliance, insurance, FAIR Plan, south bay, landlord costs
Back to the Schofield Properties blog
Schofield Properties is a family run property management company at 323 Richmond St, El Segundo, CA 90245. We have managed the South Bay since 1972 and personally oversee about 186 doors today. Book a call to talk about your property.
_1771595201102_optimized-600-hSjj9YMN.webp)
_1771595201094_optimized-DUHa1RXZ.webp)