LAKE TAHOE, Calif./Nev. – Cal FAIR, the last-resort insurance program for fire coverage, is looking for a rate hike averaging a little below 36% from the state insurance department. This rate hike would result in an increase for Tahoe and Truckee policyholders, as much as 50% in some areas–which some would argue is anything but fair.

The FAIR Plan is a state-created and privately-run insurance pool that is required to offer coverage to those who cannot get it on the regular market. Their board has representatives from some of the major insurers in California. But the policy only covers fire damage, meaning that policyholders must seek out a second policy for other generally covered damages. According to the Department of Insurance, two-thirds of FAIR Plan policy holders bought a secondary policy in 2023.

Insurance Commissioner Ricardo Lara implemented reforms at the beginning of the year that allowed for these rate increase requests. One of them was a wildfire catastrophe model, which could be used to capture current and future risk rather than past risk through historical data.

Other insurers are asking for rate increases, but the FAIR Plan’s is on average far higher at 35.8%. Back in 2021, the FAIR Plan requested a 48.8% raise, but was approved for a 15.7% increase that took effect at the end of 2023.

Under previous rulings, the FAIR Plan says it would have sought to raise rates to an average of 80%.

This doesn’t just affect FAIR Plan holders either. Earlier this year, the FAIR Plan told regulators it was running out of money to pay claims from the Los Angeles County wildfires. The California Department of Insurance authorized them to collectively charge $1 million to private insurance companies to cover the claims.

$500 million of that payment could be passed onto policyholders of those private insurers, which has led a group called Consumer Watchdog to file a complaint in April, who want to bar the bailout from being passed to consumers.

In the past, the FAIR Plan also allegedly improperly denied or limited coverage for “non-permanent smoke damage”, with 59 cases in 2022. This August, Lara issued a cease and desist to the FAIR Plan for allegedly denying claims from homeowners whose homes have now been contaminated with lead, asbestos and other heavy metals through fire.

Gov. Gavin Newsom issued a letter saying that the examples of claims denials “suggest the FAIR Plan may be continuing to apply an illegal standard to determine whether a home sustained physical damage… I am deeply concerned that the FAIR Plan’s handling of these claims is unscrupulous and unfair, and may ultimately be illegal.”

According to The Mercury News’s reporting on the FAIR Plan changes, in South Lake Tahoe, where there are 4,787 policyholders, the average rate change under the FAIR Plan would be a 42.9% increase, leading to an average change of $1,567.

In Truckee, where there are 5,814 policyholders, the average rate change would be a 32.8% increase, with an average change of $1,442.

Other counties and areas within the Tahoe Basin could expect an average increase of anywhere between 20 to nearly 30%.

The number of residential FAIR Plan policyholders has nearly doubled to 540,642 as of June of this year. If the state insurance department approves of the rate increase, it could go into effect in April of 2026.

Eli Ramos is a reporter for Tahoe Daily Tribune. They are part of the 2024–26 cohort of California Local News Fellows through UC Berkeley.