California's insurer of last resort is playing a role in mortgages

(This story was updated to add new information.)

More than 1 in 17 new California home loans are being written using the state’s insurer of last resort — the California FAIR Plan, which has ballooned in growth in recent years.

That’s among the findings coming from a report from Stanford University's Climate & Energy Policy Program, which looks at California’s homeowners insurance market and wildfires, providing figures that speak to the rising costs people have faced in recent years, California FAIR Plan or not. A study last year found that most Californians worried about homeowners insurance costs and availability because of climate change.

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In the first quarter of 2026, 5.6% of mortgage originations for owner-occupied, single-family homes used the California FAIR Plan, the report said; That translates into more than 1 in 17 homes, a figure reported by co-author Michael Wara and confirmed during an interview with two other authors in June.

The California FAIR Plan provides basic property coverage for those who don’t have another option, and its active policies have ballooned over recent years — a reported sign of an insurability crisis.

Th 5.6% figure is actually a decline from a peak in recent years. In the first quarter of 2025, 8.1% of mortgage originations for single-family homes used FAIR Plan as the primary insurer. Nam Nguyen said he wasn’t entirely certain as to what drove that 8.1% figure when he spoke to the USA TODAY Network in June. However, it could be related to when insurers in California weren’t writing new policies for homeowners several years prior, said Nguyen, one of the report's authors.

State Farm, for example, announced it would stop accepting new applications for homeowners insurance in 2023 in California.

The report also shows the high costs Californians face in their effort to secure greater coverage.

Approximately 40% of people on the California FAIR Plan maintain an additional policy — per researchers’ sample — and that combination is costing them an average of $2,000 more in annual premiums than those just relying on the California FAIR Plan, Nguyen said during a webinar.

Who does the California FAIR Plan serve? Possibly two different groups

The California FAIR Plan is likely serving two distinct markets: High-fire risk and low-fire risk, Nguyen said.

The report, published in June, found that “as recently as 2016, most FAIR Plan customers were concentrated in environments with relatively low premiums — most likely urban settings with no wildfire risk.”

“Since then, the growth in the FAIR Plan has been from high-risk areas and since 2023, from a wider swathe of California as availability has become a significant issue,” according to the report.

The California FAIR Plan said in January it is among the state’s largest residential property insurers.

“This shift signals a restructuring of the homeowners insurance market, where the FAIR Plan has moved beyond its traditional role as an (often temporary) insurer-of-last-resort, to now play a growing role for home ownership and the broader real estate market,” researchers said.

In 2025, the Public Policy Institute of California found that 60% of Californians are very concerned that home insurance will become more expensive due to climate change-related risks, with a similar percentage of Californians reporting they were very concerned about not being able to obtain home insurance at all due to such risks.

In November, Californians will be tasked with electing a new insurance commissioner; The California FAIR Plan was, unsurprisingly, one of the topics at a candidate forum in the Pacific Palisades in March. More generally, the topic of how to fix the state’s home insurance crisis has played out at a gubernatorial debate earlier this year.

Paris Barraza is a reporter covering Los Angeles and Southern California for the USA TODAY Network. Reach her at [email protected].

This article originally appeared on USA TODAY: California's insurer of last resort is playing a role in mortgages