Key Takeaways
- In wildfire-exposed parts of California, commercial property coverage may come from admitted carriers, surplus lines insurers, the FAIR Plan, or a combination.
- The California FAIR Plan's commercial limits were raised to $20 million per building and $100 million per location, but FAIR Plan coverage is narrower than a typical commercial package.
- Documented defensible space, building hardening, and accurate replacement cost values strengthen your submission to underwriters.
- Starting the renewal process early and reviewing valuation, deductibles, and business income limits are the most practical steps owners can take now.
California businesses in wildfire-exposed areas should start renewals early, confirm replacement cost values, document mitigation, and be prepared to combine coverage from admitted carriers, surplus lines insurers, or the California FAIR Plan. The FAIR Plan raised commercial limits in 2025, but its coverage is narrower, explains the team at Bozzuto Group, a San Diego–based specialty commercial insurance brokerage.
Wildfire has reshaped California's property insurance market. Many admitted carriers have restricted new business or tightened underwriting in high-risk areas, and the state has responded with regulatory changes and an expanded role for the FAIR Plan. For business owners, the result is more work at renewal and more pieces to coordinate. This guide summarizes what has changed and what you can do about it.
What has changed in California's property insurance market?
Several developments affect commercial property buyers:
- FAIR Plan commercial limits increased. In March 2025, the California Department of Insurance approved higher FAIR Plan commercial property limits of $20 million per building and a total of $100 million per location, according to reporting by Insurance Journal and others.
- FAIR Plan assessment. In February 2025, following the Los Angeles-area wildfires, the Department approved a $1 billion assessment on insurers that participate in the FAIR Plan to help it pay claims.
- Sustainable Insurance Strategy. The Department's strategy allows insurers to use forward-looking catastrophe models and reflect reinsurance costs in rate filings in exchange for commitments to write more policies in wildfire-distressed areas. Its effect is still being debated, and much of the public reporting has focused on homeowners insurance.
- Mitigation discounts. The Department's Safer from Wildfires regulation requires insurers to recognize qualifying property hardening with discounts; ask how your carrier applies it to commercial property.
- Leadership change. California will elect a new Insurance Commissioner in November 2026, so regulatory priorities may shift in 2027.
Rules and programs are evolving, so confirm current details with your broker before relying on any one of them.
Where can businesses find wildfire coverage?
| Source | What it is | Considerations |
|---|---|---|
| Admitted carriers | Insurers licensed and rate-regulated in California | Broadest forms and guaranty fund protection, but appetite in high-risk areas may be limited |
| Surplus lines (E&S) insurers | Non-admitted carriers with more flexible rates and forms | Often available when admitted markets decline; not backed by the state guaranty fund; forms vary |
| California FAIR Plan | State-mandated insurer of last resort for property | Higher commercial limits now available, but narrower coverage and no liability |
| Layered or shared programs | Multiple insurers each taking a portion | Common for high-value properties; requires careful coordination |
Pairing the FAIR Plan with other policies
FAIR Plan policies are generally more limited than a standard commercial package and do not include liability. Owners who rely on the FAIR Plan often add a difference in conditions (DIC) policy, which fills in perils and coverages the FAIR Plan omits, along with separate general liability. Confirm that business income, equipment breakdown, and other needed coverages are addressed somewhere in the program.
What steps should business owners take now?
- Start renewal 120 days out. Marketing a wildfire-exposed property to multiple insurers takes time, and late submissions narrow your options.
- Update replacement cost values. Construction and labor costs have risen. Underinsured buildings can trigger coinsurance penalties and leave you short after a total loss.
- Review ordinance or law coverage. Rebuilding after a fire may require meeting current codes, including wildland-urban interface building standards.
- Size business income realistically. After a regional wildfire, rebuilding can be delayed by debris removal, permitting backlogs, and contractor shortages. Consider longer periods of restoration and civil authority coverage.
- Check deductibles. Some policies apply a separate wildfire deductible, sometimes expressed as a percentage of value.
- Plan for power shutoffs. Utility public safety power shutoffs can cause spoilage or downtime that standard policies may not cover.
What should you expect at renewal?
In wildfire-exposed areas, expect underwriters to ask for more information than in past years: building construction details, roof age, distance to brush, and photos of the site. Quotes may arrive later, with higher deductibles or reduced limits, and some programs may need to be split among several insurers. Budget extra time to compare forms, because the cheapest option may exclude coverage you assumed was included.
How does mitigation affect underwriting?
Underwriters in wildfire areas look closely at what you have done to reduce risk. Documentation turns good practices into underwriting credit. Consider:
- Maintaining defensible space and a noncombustible zone immediately around buildings
- Ember-resistant vents, Class A roofing, and enclosed eaves
- Clearing gutters, roofs, and yards of vegetation and debris
- Storing pallets, fuel, and combustible materials away from structures
- Fire suppression, monitored alarms, and adequate water supply
For example, imagine a manufacturer on the edge of a canyon that submits dated photos of cleared vegetation, a roof replacement invoice, and a site map showing hydrants. That package gives an underwriter something concrete to evaluate. Our loss control team can help assemble similar documentation.
How Bozzuto Group Helps
We work with California businesses across real estate, cannabis, manufacturing, agriculture, and hospitality, many in wildfire-exposed areas. We market submissions to admitted and surplus lines carriers, evaluate FAIR Plan and DIC combinations when needed, and check that valuation, business income, and deductibles reflect your actual risk. We also help organize mitigation documentation before renewal. Learn more about commercial property insurance and business interruption coverage.
If your renewal is within the next six months, call Bozzuto Group at 858-805-1865 or request a quote to start early.
Frequently Asked Questions
Can California businesses get commercial insurance through the FAIR Plan?
Yes. The California FAIR Plan offers commercial property coverage for businesses that cannot find coverage in the traditional market. In 2025, its commercial limits were raised to $20 million per building and $100 million per location. FAIR Plan coverage is narrower than a typical commercial package and excludes liability, so many owners add a difference in conditions policy and separate liability coverage.
What is a difference in conditions (DIC) policy?
A difference in conditions policy fills gaps left by a primary property policy with limited coverage, such as a FAIR Plan policy. It can add perils and coverages like water damage, theft, and business income, depending on the form. DIC is also used for earthquake and flood. Coverage depends on the carrier and policy wording, so coordinate it carefully with your primary policy.
Why are commercial insurers leaving wildfire areas in California?
Insurers have cited wildfire losses, rising rebuilding and reinsurance costs, and rate-setting constraints as reasons for limiting new business in high-risk areas. California's Sustainable Insurance Strategy allows catastrophe models and reinsurance costs in rate filings in exchange for commitments to write more policies in distressed areas. Availability varies by location, occupancy, and building characteristics.
Does wildfire mitigation lower commercial insurance premiums?
Mitigation can improve how underwriters view your property and may support better terms or availability. California's Safer from Wildfires regulation requires insurers to recognize qualifying hardening with discounts, though application to commercial property varies by carrier. Documenting defensible space, roofing, vents, and fire protection gives underwriters evidence to consider when pricing your risk.
Is surplus lines insurance safe for California businesses?
Surplus lines, or excess and surplus (E&S), insurers are non-admitted carriers that can write risks admitted carriers decline. Eligible surplus lines insurers in California must meet state requirements, but their policies are not backed by the California Insurance Guaranty Association. Your broker can review an insurer's financial strength and explain how its policy form differs.