Two California Home Insurers To Raise Rates, Expand Coverage By Late 2026

Two California home insurance providers, Travelers Insurance and the the Interinsurance Exchange of the Automobile Club, are seeking to hike rates 7% and 11%, respectively, under a new catastrophic modeling plan adopted by the state in 2025.

Developed in 2023 and offered to insurance providers last year, the rate program was created by Department of Insurance Commissioner at a time when providers were fleeing the state over rising wildfire risks. In exchange for writing residential policies for at-risk properties equal to at least 85% of their market share, providers can adopt the catastrophic model, which includes forward-looking risk factors and reinsurance costs when justifying rate increases.

Travelers is seeking a rate increase of 6.9% for single family homes while dropping insurance costs 17% for renters, 22.8% for condo owners and 19.6% for condominium landlords.

With 32,756 California policyholders of its total 195,413 policyholders in distressed areas, Traveler’s plans to include wildfire-prepared homes that use hardening elements and defensible space.

As part of the model requirements, the company also will help homeowners exit the Fair Access to Insurance Requirements Plan, or FAIR Plan. The insurance of last resort was created for property owners unable to obtain coverage through the traditional market due to high-risk factors like wildfire and covers basic fire and smoke damage.

FAIR Plan policies have skyrocketed in recent years after traditional insurers stopped writing new policies while canceling others as wildfire damages mounted. As of June 2025, the FAIR Plan’s total exposure was $650 billion, reflecting a 42% increase since September 2024, and a 289% increase since September 2021.

Also see: Mercury to seek new home insurance rates using California’s risk modeling system

“California homeowners want access to reliable, fairly priced coverage and service from financially strong insurers they can count on,” said Michael Klein, executive vice president and president of Personal Insurance at Travelers.

The Interinsurance Exchange of the Automobile Club is raising rates by 11.2% for single family home owners and reducing rates 27% for renters and 20.5% for condo owners.

With 40,276 policies out of a total 564,025 in distressed areas, Interinsurance Exchange plans to add more than 2,000 policies in fire-risk areas. The Interinsurance Exchange also would reduce its FAIR plan coverage.

Mapped: See where California FAIR Plan seeks home insurance rate hikes

By last fall, several home insurance companies – including Mercury, CSAA, Pacific Specialty, Allstate, and Farmers – had announced plans to expand or resume writing new policies with the state’s catastrophic insurance plan.

See more: California seeks up to $4 million from State Farm over alleged mishandling of wildfire claims

The updated Traveler and Interinsurance Exchange plans would take effect later this year after DOI approval. The application process takes an average 120 days, which has been a point of concern among insurance reform advocates who have pushed for change.

“The filings made under these rules weren’t able to happen until mid-2025, which means the resulting rates wouldn’t be implemented till 2026 for the most part,” said Nancy Watkins, a consultant at risk assessment firm Milliman. “For insurers, it will take awhile to dig out of the hole caused by decades of actuarially unsound pricing. So for consumers, the opening up of the market will be gradual and not sudden.”

The two insurers’ rate change applications came days before the DOI filed legal action against State Farm on March 4 over its alleged mishandling of claims filed by survivors of the January 2025 wildfires that swept through the Los Angeles area.

Also see: Southern California News Group named Pulitzer finalist for Eaton, Palisades fire coverage

The office and insurance giant have maintained a months-long dispute since State Farm first sought to raise its home insurance rates by 30% in an emergency hike following last year’s January wildfires. The insurer’s interim 17% rate hike from June 2025 has since been settled.

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