California homeowners could be on the hook for $1,000 or higher surcharge if FAIR Plan runs dry

Fire insurance costs in California have surged, prompting homeowners to rely on the FAIR Plan, a government-backed insurer. Concerns about FAIR's financial stability have grown, with estimates suggesting potential surcharges of $1,000 to $3,700 for policyholders due to significant wildfire damages. FAIR currently has around $200 million in cash and $2.5 billion in reinsurance, but its exposure is high, particularly in areas like Pacific Palisades. Additionally, premiums may rise by 40% to 50% due to new regulations allowing reinsurance costs to be passed to customers.