Opening the mailbox to find a non-renewal notice from your home insurance provider has become a rite of passage for many Californians. As major carriers pause new business or exit the state entirely, homeowners are finding themselves navigating a market that feels vastly different than it did just five years ago.
The traditional advice has always been simple: bundle your home and auto policies to save money. But in the current landscape, that advice is often obsolete. If your auto insurer isn’t writing new home policies, bundling is impossible. If you are in a high fire-risk zone, you might feel like your only option is the state’s “insurer of last resort,” the FAIR Plan.
However, you have more options than you might think. While the market is challenging, it is not impossible to navigate if you understand the different layers of coverage available. This guide explores how to secure robust home insurance in California without relying on a bundle and how to build a safety net that goes beyond the basic FAIR Plan.
Understanding the CA FAIR Plan
To make informed decisions about your insurance, you first need to understand the baseline. The California Fair Access to Insurance Requirements (FAIR) Plan was established to ensure that all homeowners, regardless of their property’s location, have access to basic property coverage.
It is crucial to understand that the FAIR Plan is not a government-funded program; it is a syndicated fire insurance pool comprised of all insurers authorized to conduct property/casualty business in California. It is designed as a temporary safety net, yet for many, it has become a long-term solution.
What it covers (and what it doesn’t)
The FAIR Plan is a “named peril” policy. This means it only covers damage specifically listed in the policy. The standard policy covers:
- Fire
- Lightning
- Internal explosion
- Smoke
You can pay extra for optional endorsements to cover vandalism or malicious mischief, but the coverage stops there. Importantly, the FAIR Plan does not cover liability (if someone slips on your driveway), theft (if someone breaks in), or water damage (if a pipe bursts).
Key Limitations
Beyond the limited scope of perils, there are financial caps. As of 2024, the maximum limit for a residential policy (covering the dwelling and contents combined) is $3 million. For homeowners in affluent areas or those with high-value properties, this cap can leave them significantly underinsured.
Furthermore, the FAIR Plan is becoming more expensive. Recent data from the California Department of Insurance (CDI) shows that FAIR Plan policies increased by 18% in 2023 alone. As the pool of high-risk homes grows, the costs to insure them rise, making the FAIR Plan a costly option that offers minimal protection.
Why Bundling Matters (and Doesn’t)
For decades, insurance agents have preached the gospel of bundling. Combining your home and auto insurance with a single carrier like State Farm, Farmers, or Allstate typically unlocked discounts ranging from 15% to 25%.
The breakdown of the bundle
In the current California market, the bundle is breaking down. Seven of the top twelve insurance groups in the state have paused or strictly limited new homeowner policies. This creates a scenario where a homeowner might have a fantastic auto rate with a major carrier but cannot get a home policy with them.
If you attempt to move your auto policy to a new carrier just to secure a home bundle, you might find that the new carrier’s home premiums are astronomically high—negating any “bundling discount” you received.
The “Decoupled” Strategy
Homeowners must shift their mindset from “bundling” to “decoupling.” It is now financially strategic to keep your auto insurance with your legacy carrier (to maintain those lower rates and longevity discounts) and shop for a standalone home insurance policy.
While you lose the multi-policy discount, you gain access to specialized insurers who are still writing business in California but don’t offer auto insurance. This opens up a wider marketplace of “monoline” (single line of coverage) carriers.
Alternative Insurance Options
If you cannot bundle with a major carrier and you want to avoid the limitations of the FAIR Plan, where do you go? You look toward the “Admitted” and “Non-Admitted” markets.
The Admitted Market (Regional Carriers)
Just because the national giants have paused business doesn’t mean everyone has. There are smaller, regional insurance carriers that are “admitted” in California. Being “admitted” means their rates and forms are regulated by the CDI, and they are backed by the California Insurance Guarantee Association (CIGA), which protects policyholders if the insurer goes bankrupt.
These carriers often fly under the radar because they don’t advertise during the Super Bowl. Working with an independent broker—rather than a “captive” agent who only sells one brand—is the best way to find these companies.
The Surplus Lines Market (Non-Admitted)
If admitted carriers reject you, your agent can look to the “surplus lines” market. These are “non-admitted” insurers.
What you need to know about Surplus Lines:
- Flexibility: Because they are not strictly regulated by the state regarding rates and forms, they can take on higher risks that standard carriers won’t touch.
- Cost: They are typically more expensive than standard policies.
- Protection: They are not backed by CIGA. If a surplus lines carrier becomes insolvent, the state guarantee fund will not bail you out. However, many surplus lines carriers are well-capitalized subsidiaries of major global insurers (like Lloyd’s of London).
- Coverage: Unlike the FAIR Plan, surplus lines policies are often comprehensive (HO-3) policies. They include liability, theft, and water damage, meaning you don’t need to buy multiple separate policies.
The DIC “Wrap-Around” Policy
If you absolutely must use the FAIR Plan, you should never hold it alone. You need a “Difference in Conditions” (DIC) policy.
A DIC policy wraps around your FAIR Plan to fill the gaps. The FAIR Plan covers the fire; the DIC covers the theft, liability, and falling objects. When you combine a FAIR Plan policy with a DIC policy, you essentially recreate a standard homeowners policy.
The Dangerous Gap: According to CDI data, for every two FAIR Plan policies in existence, there is only roughly one DIC policy. This suggests that nearly half of FAIR Plan policyholders have no liability or theft coverage. Do not fall into this statistic.
Tips for Securing Home Insurance
Finding coverage requires more legwork than it used to. Here is a strategic approach to securing a policy.
1. Work with an Independent Broker
A captive agent (someone who works for one specific brand) can only sell you that brand’s product. If that brand isn’t writing new business, they can’t help you. An independent broker has appointments with dozens of carriers, including surplus lines and DIC providers. They can scour the entire market on your behalf.
2. Harden Your Home
Insurers are increasingly using aerial imagery and AI to assess wildfire risk. You can improve your eligibility by “hardening” your home:
- Defensible Space: Clear brush, dead leaves, and flammable vegetation within 5 to 30 feet of your home.
- Roofing: Ensure you have a Class A fire-rated roof (asphalt composition, metal, tile).
- Vents: Install ember-resistant vents to prevent embers from being sucked into your attic.
California regulations now require insurers to provide discounts to homeowners who perform these mitigation efforts. Ask your broker specifically about “wildfire mitigation discounts.”
3. Start Early
If your renewal is coming up, do not wait until the week before expiration to shop. The underwriting process for surplus lines or FAIR Plan policies can take weeks. Inspections may be required before a policy is bound. Start your search at least 45 to 60 days before your current policy expires.
4. Check the CDI Resources
The California Department of Insurance maintains a “Home Insurance Finder” tool and a list of carriers currently offering DIC policies. These are excellent starting points to identify which companies are active in your county.
Case Studies: Real-World Scenarios
To illustrate how this works in practice, here are two hypothetical scenarios based on common California homeowner experiences.
Scenario A: The “Decoupled” Homeowner
The Situation: Sarah lives in the foothills of San Diego County. She has been with a major national carrier for 20 years for both home and auto. She received a non-renewal notice for her home due to “wildfire density,” but her auto policy remained active.
The Solution: Sarah wanted to keep her auto policy because the rate was unbeatable. She contacted an independent broker who found a “Surplus Lines” carrier willing to insure her home.
- Outcome: Sarah kept her auto with the major carrier. She purchased a standalone home policy from the surplus lines market. It cost $800 more per year than her old policy, but it provided full comprehensive coverage without needing the FAIR Plan. She did not bundle, but she remained fully insured.
Scenario B: The “Wrap-Around” Strategy
The Situation: Mark and Linda live in a high-severity fire zone in the Sierra Nevada foothills. After three admitted carriers declined them, and two surplus lines carriers quoted premiums outside their budget, they felt stuck.
The Solution: Their broker applied for the California FAIR Plan to cover the fire risk, which is their biggest threat. However, Mark was worried about liability because they own a swimming pool and a dog.
- Outcome: They secured the FAIR Plan for fire/smoke coverage ($3,500/year). They then purchased a separate DIC (Difference in Conditions) policy from a specialty insurer ($1,200/year) to cover the liability, theft, and water damage.
- Result: They have two separate bills and two separate deductibles, but their total coverage mirrors a standard policy, protecting their financial assets from lawsuits as well as wildfires.
Conclusion
The era of easily clicking a button to “bundle and save” on California home insurance is currently on pause for many residents. But the narrative that the FAIR Plan is your only option is often incorrect.
By exploring the surplus lines market, utilizing DIC wrap-around policies, and working with independent brokers who understand the intricacies of the non-admitted market, you can build a shield of protection around your home.
Do not wait for a non-renewal notice to educate yourself. Review your current coverages, clear your defensible space, and know that even in a restricted market, options exist for those who know where to look.