California lawmakers have introduced AB 1680, known as the Make It FAIR Act, positioning it as a reform measure aimed at strengthening oversight of the California FAIR Plan—a property insurance product offered by an alliance of insurers as a last resort—and improving outcomes for wildfire survivors. While the legislation is framed as a response to transparency and governance concerns, its practical impact on homeowners who rely on the FAIR Plan remains limited.
What Is the Make It FAIR Act and Why Now?
AB 1680 appears to be a response to political and public pressure following a 2025 CBS News investigative report that raised serious concerns about secrecy and governance within the California Fair Access to Insurance Requirements (“FAIR”) Plan Association. The bill has been championed by the Insurance Commissioner’s Office and Assembly member Lisa Calderon as a means to expand coverage options, improve claims handling, and enhance transparency, particularly for wildfire survivors.
While these goals are laudable, the legislation largely amounts to political virtue signaling rather than substantive reform. The bill does little to meaningfully assist individual homeowners who, due to market conditions, have been left with no practical alternative but to purchase coverage through the FAIR Plan.
The FAIR Plan’s Expanding Role
The FAIR Plan was created in 1968, designed to provide basic property insurance when coverage was otherwise unavailable. Ironically, it has since become one of the largest insurers in California, largely because seven of the state’s top twelve private insurers—including State Farm, Allstate, Farmers, Travelers, Chubb, Nationwide, and USAA—have either stopped writing new property policies or declined to renew existing ones.
For many homeowners, especially in wildfire-prone of the state, the FAIR Plan is no longer a last option; it is their only option.
Why the FAIR Plan Coverage Falls Short
Coverage under the FAIR Plan is significantly more limited than a standard homeowners’ insurance policy. Among the most notable limitations:
- No personal liability coverage, leaving homeowners exposed if someone is injured on their property.
- No coverage for additional living expenses, such as temporary housing after a loss has displaced residents.
- Actual Cash Value (ACV) only (the amount to repair or replace the home, minus decrease in value due to age, or wear and tear), rather than replacement cost coverage (the cost to replace a damaged item with a brand new one of similar quality, without considering depreciation).
- A maximum ACV limit of $3 million, which may be inadequate for higher-value homes in areas such as Malibu, Pacific Palisades, or Pasadena/Altadena.
These restrictions can leave homeowners severely underinsured at the very moment they need coverage most.
The “17 Critical Recommendations” Problem
Supporters of the Make It FAIR Act highlight 17 critical recommendations that the FAIR Plan has allegedly failed to implement, citing the most recent California Department of Insurance examination.
However, these failures are not new. These 17 points are the unresolved remnants of 32 findings first identified in a 2022 assessment. Despite three years of oversight, the December 2025 report confirms that over half of those original reforms remain untouched. This raises a troubling question: Why did it take more than three years for regulators and lawmakers to meaningfully respond to a known crisis?
Claims Handling: The Most Serious Shortcoming
Of the unimplemented recommendations, the most concerning relate to claims handling practices, particularly for smoke and ash damage arising from wildfires.
Multiple lawsuits allege that the FAIR Plan has improperly denied smoke and ash claims stemming from the devastating January 2025 wildfires. The 2025 examination report confirmed that the FAIR Plan:
“Has not submitted an updated form filing addressing policy coverage changes for smoke and ash claims to comply with California law.”
In at least one case, a court concluded that aspects of FAIR Plan policies unlawfully restricted coverage in violation of California Insurance Code sections 2070 and 2071, which establish the standard fire insurance policy in the state. Courts have recognized that the presence of smoke and ash can constitute a “direct physical loss,” and therefore should be covered under FAIR Plan policies.
What Does “More Comprehensive Coverage” Really Mean?
The Make It FAIR Act calls for “more comprehensive” coverage, but the legislation leaves a key issue unresolved: cost.
A fundamental reality of insurance is that more coverage generally means higher premiums. Private insurers have already argued that California’s regulatory framework prevents them from pricing risk, particularly wildfire risk accurately. It remains unclear how AB 1680 will expand FAIR Plan coverage without substantially increasing premiums, thereby placing additional financial strain on homeowners who are already paying for limited protection.
Looking Ahead
While AB 1680 may improve transparency and governance at the margins, it does not address the core problem of a shrinking private insurance market and a FAIR Plan that is ill-equipped to function as California’s de facto primary insurer. Without reforms that balance consumer protection with financial reality, the Make It FAIR Act risks being a missed opportunity rather than a real solution.
