Wildfire Insurance in California: FAIR Plan Limits Explained

Wildfires are a constant threat in California. Many homeowners wonder: does home insurance cover wildfire damage? The short answer is yes—but the real story is more complicated, especially for luxury estates in wildfire-prone areas.

In 2025, thousands of Californians saw their home insurance policies non-renewed as insurers pulled back from high-risk zones. Premiums spiked by as much as 50%, forcing many families into the California FAIR Plan, the state’s insurer of last resort. While the FAIR Plan provides essential protection, it caps coverage at $3 million, leaving multimillion-dollar estates exposed.

California Fair Plan Limits Explained

For Bay Area luxury homeowners with $5M–$15M+ properties, this gap isn’t just inconvenient; it can mean millions out of pocket if wildfire strikes.

Does Home Insurance Cover Wildfire Damage in California?

Yes, under standard homeowner policies, wildfire is considered a “covered peril.” This means fire damage to your home, belongings, and structures should be included.

But here’s the problem: in wildfire-prone regions like Los Gatos, Saratoga, and Mill Valley, many insurers have stopped issuing or renewing policies altogether. If you can’t get coverage, the question isn’t “does home insurance cover wildfire?”—it’s “can you even get home insurance at all?”

What Is the California FAIR Plan?

The California FAIR Plan provides fire coverage when private insurers won’t. As of 2025, it caps coverage at $3 million.

For modest homes, this may be enough. But for a 7,000-square-foot estate that could cost $7M–$10M to rebuild, the FAIR Plan falls drastically short. High-end finishes, custom architecture, and luxury amenities like wine cellars or infinity pools are rarely covered to full value.

Wraparound Insurance: A Partial Solution

Many homeowners supplement the FAIR Plan with wraparound insurance—sometimes called a Difference in Conditions (DIC) policy.

Here’s how it works:

• The FAIR Plan covers fire and smoke damage up to $3M.

• The wraparound policy covers everything else: liability, theft, water damage, and additional perils that the FAIR Plan excludes.

  
  

This pairing offers broader protection, but it still doesn’t close the wildfire gap for luxury estates. The FAIR Plan’s $3M cap remains the ceiling, meaning a $10M estate destroyed by fire still leaves the owner with a $7M uninsured loss.

In short: wraparound insurance is better than FAIR alone, but it’s not a complete solution for high-value properties.

Why Luxury Homes Face a Coverage Gap

High-end homes in the Bay Area WUI face three realities:

1. Rising Costs – Rebuild costs can exceed $1,000 per square foot.

2. Coverage Limits – FAIR Plan caps at $3M, even with wraparound.

3. Premium Hikes – Standard insurance premiums are climbing 30–50%.

   
   

This leaves luxury homeowners with millions in uninsured exposure, a risk most don’t realize until it’s too late.

Protecting Beyond Insurance with Wildfire Defense Systems

How Wildfire Defense Systems Work

Insurance is about recovery after the fire. But the smartest homeowners are investing in prevention.

FireRoofs provides advanced wildfire defense systems that work autonomously to defend estates in real-time:

• Roof, eave, and perimeter sprinklers that saturate surfaces and stop ember ignition.

• Class A fire foam, a USDA-approved biodegradable barrier that enhances water effectiveness.

• AI flame sensors with perimeter detection and wildfire mapping up to 7 miles away.

• Starlink satellite connectivity with solar + battery backup for reliability.

  
  

Book a FireRoofs Wildfire Defense System evaluation

Beyond physical defense, FireRoofs systems provide documentation to help homeowners qualify for 10–20% insurance discounts under California’s Safer from Wildfires law.

Key Takeaways

• Does home insurance cover wildfire in California? Yes—but only if you can still get a policy.

• FAIR Plan limits cap coverage at $3M, leaving multimillion-dollar estates underinsured.

• Wraparound insurance helps, but doesn’t remove the wildfire cap.

• Wildfire defense systems hedge the risk by protecting what insurance can’t replace.

  
  

Your home, memories, and investment deserve protection beyond insurance. Book a FireRoofs Wildfire Defense System evaluation

The Importance of Comprehensive Coverage

In high-risk areas, understanding your insurance options is crucial. Many homeowners overlook the nuances of their policies. It’s essential to read the fine print and know what is covered and what isn’t.

The Role of Technology in Wildfire Defense

Modern technology plays a significant role in wildfire defense. Homeowners can now utilize app control to monitor their properties. This feature allows for real-time updates and alerts, ensuring you are always informed. AI detection systems can identify potential threats before they escalate.

Investing in Peace of Mind

Investing in advanced wildfire defense systems is not just about protecting your property; it’s about securing peace of mind. Knowing that you have taken proactive steps to safeguard your home can alleviate stress.

Conclusion

Wildfire threats are real and growing. As a luxury homeowner, you must be proactive. Understand your insurance, consider wraparound policies, and invest in advanced wildfire defense systems. Protect your investment and your peace of mind.

By taking these steps, you can ensure that your home remains a safe haven, even in the face of increasing wildfire risks.