Farmers Insurance is taking a bold step to address California’s ongoing homeowners insurance crisis in wildfire-prone regions. The company plans to increase the number of policies in force in distressed areas by at least 5%, contingent on approval of a new rate filing that includes an average statewide rate increase of 6.99%. This move comes as part of California Insurance Commissioner Ricardo Lara’s Sustainable Insurance Strategy, which encourages insurers to expand coverage in high-risk zones in exchange for regulatory flexibility, such as using forward-looking catastrophe models for pricing.
For years, homeowners in wildfire-impacted areas have faced shrinking options as major carriers scaled back or exited the market. Many were left relying on the state-run FAIR Plan, which has doubled in size since 2020 and now serves over 450,000 policyholders. Farmers’ decision to lift its cap on new policies and market directly to 300,000 consumers in designated distressed areas could restore some stability and choice. The company plans to offer products such as Smart Plan Home®, Condominium, and Renters insurance starting in early 2026.
The proposed rate increase reflects rising costs driven by inflation, reinsurance, and catastrophic losses. While higher premiums may strain household budgets, Farmers is also boosting its bundling discount from 15% to 22%, creating opportunities for savings when combining home and auto policies. Consumer advocates, however, caution that reforms must ensure affordability alongside availability, as loopholes could allow insurers to raise rates without delivering meaningful coverage expansion.
California’s insurance market has been battered by record-breaking wildfires—15 of the state’s 20 most destructive fires have occurred since 2015—prompting carriers like State Farm and Allstate to pause new business. Farmers’ expansion signals progress, but the trade-off between coverage and cost remains a delicate balance. As climate change intensifies wildfire risks, homeowners should stay informed, explore discounts, and invest in mitigation measures to protect their properties.