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‘make It Fair Act:’ What California Policyholders Need To Know

By Amber Finch and Jessica Gopiao

In the aftermath of the 2025 Los Angeles wildfires, California's insurance system was pushed to its breaking point. Thousands of homeowners filed claims at once, and the result was chaos: overwhelmed insurers, slow processing of claims and widespread confusion among people desperate to rebuild their lives.

Amber Finch

Policyholders often find themselves waiting weeks or even months for meaningful answers. Their claims are passed from one adjuster to another, with each new handler unfamiliar with the history of the file. Communication becomes fragmented and inconsistent: one representative offers reassurance, another contradicts it. Requests for documentation are repeated. Decisions that should be straightforward stall without explanation. Meanwhile, payments families depend on to secure temporary housing, replace essentials and begin repairs arrive far too late or not at all.

Jessica Gopiao

Making matters worse, many homeowners in high-risk fire areas don't have traditional homeowners insurance. Instead, they rely on the California FAIR Plan—a state-run safety net designed for people who can't get coverage elsewhere. But the FAIR Plan has historically offered limited protection, covering only fire and smoke damage. For everything else — water damage, theft, liability or the cost of living somewhere else while your home is repaired — Californians needed a separate policy from a different insurer. This patchwork system created coverage gaps and meant dealing with multiple insurance companies after a single disaster.

On Feb. 2, California announced a major overhaul. Insurance Commissioner Ricardo Lara and Assemblymember Lisa Calderon introduced the "Make It FAIR Act" (Assembly Bill 1680) to fix these problems. The bill aims to expand what the FAIR Plan covers, strengthen how claims are handled and hold the system accountable when it fails policyholders.

Better coverage under one roof

One of the biggest changes AB 1680 could bring is simpler, more complete coverage.

Right now, if you have a FAIR Plan policy, the policy provides coverage for fire and smoke —that's it. If a wildfire damages your roof and then broken sprinklers flood your living room, you might have to file claims with two different insurers. Each insurer has its own adjuster, its own process and its own timeline. When those insurers disagree about who's responsible for what, you're the one stuck in the middle.

AB 1680 gives the insurance commissioner the authority to require the FAIR Plan to offer broader, all-in-one policies. Think of it like a standard homeowners policy: coverage for your home's structure and your belongings, liability protection if someone gets hurt on your property, and money for temporary housing if you can't live in your home while it's being repaired.

The practical benefit is straightforward. One policy means one adjuster handling your entire loss. Fewer coverage gaps. Fewer disputes between insurers. Faster payments.

Feature	Current System	Potential System Under AB 1680
What's covered	Fire and smoke only through FAIR Plan; water damage, theft, liability, and living expenses require a separate policy	A single policy could cover your home, belongings, liability, and living expenses—similar to traditional homeowners insurance
Filing a claim	Multiple insurers, multiple adjusters, and potential disputes over who pays for what	One adjuster under one policy handles everything, reducing conflicts and confusion
What you pay	Two separate premiums; the add-on policy can be expensive and unpredictable	One premium, though pricing will need to account for the broader coverage

Faster, more consistent claims handling

The state documented serious problems with how claims were handled after the 2025 wildfires: long delays, unfair denials and inconsistent decisions in which similar claims received different outcomes.

AB 1680 responds by turning recommendations into requirements. The FAIR Plan must now follow the Department of Insurance's guidance on operations and consumer protections — or face penalties. That means specific benchmarks for response times, clearer standards for how claims are evaluated and real accountability when things go wrong.

The bill also requires the FAIR Plan to beef up its operations. That includes hiring more staff and developing a three-to-five-year strategic plan to handle claims more efficiently. The goal is simple: When you file a claim, someone should respond quickly, handle your case competently and make decisions that are fair and consistent.

Real consequences for failure

In the past, the FAIR Plan could fall short of consumer protection standards without facing meaningful repercussions. AB 1680 changes that.

The bill creates a new penalty structure. If the FAIR Plan violates consumer protection requirements, it can be fined up to $10,000 per violation — or up to $20,000 if the violation was intentional. These aren't just symbolic fines. They're designed to create real pressure to process claims accurately and on time.

More transparency, more accountability

AB 1680 also pulls back the curtain on how the FAIR Plan operates.

The bill requires open access to the FAIR Plan's governing meetings and key documents. It also mandates an annual report that includes information on how the organization is run, what rates are charged, how the organization plans to respond to future disasters, and how well it's serving policyholders.

Why does this matter? Because transparency creates accountability. When policyholders, consumer advocates, and regulators can see how the FAIR Plan is performing, they can push for improvements when the system falls short.

The bill goes further on financial transparency. The FAIR Plan must now assess climate-related risks and report on its financial preparedness using national standards. It must also develop capital and liquidity plans — essentially proving it has the money to pay claims when a major disaster hits. These measures are about making sure the safety net is there when policyholders need it most.

What 'Make it FAIR' means for Californians

If you're a FAIR Plan policyholder — or might become one — here's what to watch for:

Watch for new coverage options. The insurance commissioner may require the FAIR Plan to offer comprehensive policies that bundle fire coverage with protection for water damage, liability and living expenses. If this happens, consolidating your coverage could mean fewer headaches if you ever need to file a claim.

Stay informed. Keep an eye on updates from the Department of Insurance and the FAIR Plan about implementation timelines and how these reforms are rolling out.

Know your privacy options. The FAIR Plan must now tell you how it shares your information with other insurers who might offer you private coverage. You have the right to opt out of this sharing. Just be aware: opting out might mean you receive fewer offers from private insurers wanting to compete for your business.

AB 1680 represents a significant shift in how California protects homeowners who rely on its insurance safety net. By requiring better coverage options, demanding faster and fairer claims handling, imposing real penalties for failures, and shining a light on how the system operates, the bill aims to give wildfire survivors a better chance at timely, adequate help when disaster strikes.

As these reforms take effect, stay engaged with your coverage options, keep thorough records of your property and any claims, and take advantage of the FAIR Plan's resources to protect your home and your ability to recover.

Amber Finch is partner and global chair of Reed Smith’s Insurance Recovery Group in its Los Angeles office. Contact her at amber.finch@innfeedback.com.

Jessica Gopiao is counsel in Reed Smith’s Insurance Recovery Group in its Orange County, Calif., office. Contact her at jessica.gopiao@innfeedback.com.

The post ‘Make It FAIR Act:’ What California policyholders need to know appeared first on Insurance News | InsuranceNewsNet.

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