Governor Newsom signs bipartisan package of bills reforming California’s insurer of last resort
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Oct 9, 2025

Governor Newsom signs bipartisan package of bills reforming California's insurer of last resort

What you need to know: Governor Newsom signed legislation to improve the state's insurer of last resort, the FAIR Plan, a move that will strengthen California's home insurance market.

SACRAMENTO – Governor Gavin Newsom today announced he signed a bipartisan package of bills that will improve the state's insurer of last resort and help Californians recover from disasters. Today's action builds on years of work to combat the climate-fueled insurance crisis, which is being felt across the country and around the world.

The legislation strengthens the state's third-party insurer of last resort, the FAIR Plan, with new financing mechanisms to more swiftly pay claims, better oversight, improved policyholder experience, and added coverage for manufactured homes. Additionally, the California Department of Insurance will be required to consider additional home hardening measures every five years as part of its Safer from Wildfires efforts.

The kinds of climate-fueled firestorms like we saw in January will only continue to worsen over time. That's why we're taking action now to continue strengthening California's insurance market to be more resilient in the face of the climate crisis.

Governor Gavin Newsom

Last month, the Governor signed an executive order to expedite the state's response to mitigate the impacts and fairly allocate the costs of natural disasters and further stabilize the insurance market and energy utility sector.

"These crucial reforms to the FAIR Plan mark a significant step forward in protecting consumers, stabilizing the market, and enhancing transparency. As we implement the largest regulatory changes in our market, the insurance company-run FAIR Plan must meet the challenge of addressing our insurance crisis," stated Insurance Commissioner Ricardo Lara. "As we tackle availability concerns and ensure that insurance companies provide consumers with policies in the traditional market as mandated by my new regulations, the FAIR Plan must offer essential support to its customers. I am grateful to Governor Newsom for his continued leadership and to the legislators who have worked on these vital issues, which will greatly benefit communities most at risk of wildfires."

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The Governor signed the following bills:
  • AB 1 by Assemblymember Damon Connolly (D-San Rafael): Residential property insurance: wildfire risk.
  • AB 226 by Assemblymember Lisa Calderon (D-Whittier): California FAIR Plan Association.
  • AB 234 by Assemblymember Lisa Calderon (D-Whittier): California FAIR Plan Association governing committee.
  • AB 290 Assemblymember Rebecca Bauer-Kahan (D-Orinda): California FAIR Plan Association: automatic payments.
  • SB 525 by Senator Brian Jones (R-San Diego): California FAIR Plan: manufactured homes.

Stabilizing California's home insurance market

The Governor took action in 2023 with an executive order urging Insurance Commissioner Lara to take swift action to address decades-old issues with the insurance market exacerbated by climate change and expand coverage options for consumers, while maintaining strong consumer protections and keeping plans affordable. That led to the creation and swift execution of the Sustainable Insurance Strategy, a package of reforms that strengthens California's marketplace and maintains strong consumer protections.

The Governor has continued to support the Insurance Commissioner's regulatory actions in this space, including requiring insurers that use new catastrophe modeling to write more policies in distressed areas. The Department of Insurance recently announced it had completed review of three forward-looking wildfire catastrophe models, a key element of implementing the Sustainable Insurance Strategy.

Home insurance rates in California – while increasing along with the national trend due to climate-related threats – continue to be lower than the national average, among the lowest in the nation.

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