Dropped by Your Insurer in San Diego? The FAIR Plan and DIC Policies Explained

If your insurer just non-renewed you, you are not stuck without coverage. The California FAIR Plan will insure your home against fire, and a separate Difference in Conditions (DIC) policy can fill in most of what the FAIR Plan leaves out, like liability, theft and water damage. Together they act roughly like a normal homeowners policy, just in two pieces and usually at a higher price.

The catch is that a lot of people buy the first half and forget the second. Here is how it fits together, what changed in 2025 and 2026, and what I tell clients who hit this mid-escrow.

One ground rule: I am a Realtor, not an insurance agent. Treat this as a map for a better conversation with a licensed broker, not advice on your policy.

Why San Diego homeowners are getting non-renewed

The California Department of Insurance (CDI) said in a January 2025 fact sheet that insurer-initiated non-renewals often come down to wildfire risk that no longer fits underwriting guidelines, along with claims history and insurers pulling back from the market.

In San Diego County, that pressure has been concentrated in the backcountry and East County. A San Diego Union-Tribune analysis of CDI data published in January 2025 found:

• At least half of insured homes in Guatay, Palomar Mountain, Warner Springs and Mount Laguna were on the FAIR Plan in 2024.
• More than 30% of insured homes in Alpine, Jamul, Julian, Descanso and Pine Valley were on it.
• Countywide, FAIR Plan policies went from 9,670 in 2020 to more than 37,300 in 2024.

It is not only rural areas. CDI data analyzed by inewsource in 2021 showed non-renewals climbing in Scripps Ranch, Tierrasanta and Rancho Bernardo. And the City of San Diego's updated Fire Hazard Severity Zone map took effect August 30, 2025, with the City adding areas beyond what the state recommended. If you live on a canyon rim in a neighborhood you think of as "urban," check the map. Insurers certainly do.

[JOSH: add a quick story about a buyer or seller in a canyon-adjacent neighborhood who was surprised by a non-renewal or FAIR Plan quote]

What the California FAIR Plan actually covers

The FAIR Plan is an association of all property insurers licensed in California, built as a last resort for people who cannot get coverage in the regular market. The FAIR Plan itself says it may be a temporary solution.

As of October 2026, here is the basic shape of the residential (dwelling) policy, per CDI and the FAIR Plan:

• It is a limited fire policy. Think fire, lightning, smoke and internal explosion as the core. Some additional perils, like windstorm or vandalism, can be added as options. Ask your broker exactly which endorsements you are getting.
• The residential limit is up to $3 million per location. If your home's rebuild cost is higher than that, you need a plan for the gap. [VERIFY: confirm current FAIR Plan residential limit on cfpnet.com before publishing]
• It does not cover liability, theft (beyond optional vandalism coverage), or water damage like a burst pipe. CDI's own consumer guide is blunt about this.
• Earthquake and flood are separate, same as with a regular homeowners policy.

FAIR Plan changes in 2025 and 2026

A few things worth knowing, all dated:

• Rates: The FAIR Plan filed for an average 35.8% increase, and news reports from May and June 2026 say CDI approved an average of 29.1%, effective for policies renewing on or after October 15, 2026. Your number depends on your location and risk. [VERIFY: find the CDI approval notice for the 29.1% FAIR Plan rate before publishing]
• Wildfire hardening discounts: For dwelling policies effective on or after November 15, 2025, the FAIR Plan offers up to 12 mitigation discounts. Earn all of them and the FAIR Plan says you may see up to 16.4% off the wildfire portion of the premium.
• A comprehensive option is in the works. CDI's FAIR Plan page says a fuller residential policy covering things like water damage, liability and theft is in progress. In February 2026, Commissioner Lara and Assemblymember Lisa Calderon introduced AB 1680, which would require that kind of option. A third-party bill tracker shows it was signed on September 27, 2026. [VERIFY: confirm AB 1680 chaptered status and any rollout date for the comprehensive policy on leginfo.legislature.ca.gov]

Until that comprehensive option is actually available, you need the second piece.

What a DIC policy is (and why most FAIR Plan owners skip it)

A Difference in Conditions policy, often called a "wrap" policy, is written by a private insurer to sit alongside your FAIR Plan policy. CDI describes it as a product that, paired with the FAIR Plan, gets you roughly the same coverage as a traditional homeowners policy.

Typical gaps a DIC fills: personal liability, theft, water damage from plumbing failures, extra living expenses, and broader coverage on your belongings.

CDI keeps a public list of insurers that sell DIC policies built to complement the FAIR Plan.

Here is the part that worries me. CDI's January 2025 fact sheet noted roughly one DIC policy for every two FAIR Plan policies from 2020 to 2023. That suggests a lot of homeowners have fire coverage and nothing else. One slip-and-fall or failed water heater can cost more than years of DIC premiums.

How to shop when you get a non-renewal notice

Know your timeline

Under California law, an insurer must send written non-renewal notice at least 75 days before your policy expires, stating the reason. CDI's residential insurance guide also says that if the insurer fails to give proper notice, your existing policy stays in effect for 75 days from when the notice is sent.

Use those 75 days.

Check whether a moratorium protects you

After a declared wildfire emergency, the Insurance Commissioner can issue a one-year moratorium on non-renewals for homes inside or next to the fire perimeter, listed by ZIP code. CDI has used this repeatedly, most recently in August 2026 for counties affected by the Gann Fire. Homeowners who had a total loss can get longer protection. If a fire has hit near you, check CDI's bulletins for your ZIP code.

Work with an independent broker

A captive agent offers one company. An independent broker can shop admitted carriers, the FAIR Plan, DIC carriers and surplus lines. CDI recommends a broker registered to sell FAIR Plan coverage, and the FAIR Plan has a broker finder on its site.

Understand admitted vs. surplus lines

Admitted insurers are licensed by CDI, file rates with the state, and are backed by the California Insurance Guarantee Association (CIGA) if they go insolvent.

Surplus lines (non-admitted) insurers can write coverage the admitted market will not, which helps with high-value or hard-to-place homes. But CDI notes they are not backed by CIGA. That is a tradeoff to understand, not an automatic no.

Get credit for mitigation

CDI's "Safer from Wildfires" framework, which dates to 2022, requires insurers to offer discounts for specific mitigation steps. The list includes a Class A roof, ember-resistant vents, a five-foot ember-resistant zone around the house, enclosed eaves, upgraded windows, six inches of noncombustible material at the base of exterior walls, clearing under decks, and defensible space compliance. Community programs like Firewise USA count too.

Document the work with photos and receipts so your broker can submit it.

Keep an eye on the market

The regular market is showing early signs of loosening. Under CDI's Sustainable Insurance Strategy, insurers can now use wildfire catastrophe models in rate setting (CDI completed review of three models in August 2025) on the condition that they write more policies in wildfire-distressed areas. As of a CDI update dated May 1, 2026, carriers including Mercury, CSAA, Farmers, USAA, Travelers and AAA SoCal had committed to expand, and FAIR Plan growth slowed to about 16,000 new residential policies in Q1 2026, down from 35,000 to 50,000 per quarter in 2024.

My opinion: that does not mean a carrier will take you back next month, but it is a good reason to re-shop every renewal.

Buying a home in San Diego? Get insurance quotes during your contingency

This is where I see the most avoidable stress.

The standard California purchase agreement treats the availability and cost of homeowners insurance as part of the buyer's investigation. Translation: you are supposed to check this before you remove contingencies, not after.

What I tell buyers:

• Call a broker the day your offer is accepted. Share the address, year built, roof age and updates.
• Get a full quote, not a ballpark. If it is FAIR Plan plus DIC, add both numbers.
• Run that number past your lender. It feeds your monthly payment and debt-to-income ratio.
• Confirm lender acceptance. Fannie Mae's guidelines accept a state FAIR Plan policy if it is the only coverage available at closing, but lenders can have their own requirements on dwelling amount, deductibles and perils. Ask your loan officer early.
• Check the seller's disclosures for past claims. They can affect your quotes.

How this affects selling a home in San Diego

If you are selling in a higher-risk area, assume buyers will check insurance early. Have your current declarations and receipts for roof, vent or defensible space work ready to share, and price knowing buyers budget on the full monthly payment.

FAQ

Does the California FAIR Plan cover theft or liability?

Not on its own. The FAIR Plan is a limited fire policy, so liability, theft and water damage need a separate DIC policy. A comprehensive FAIR Plan option has been in progress, so ask your broker whether it is available yet.

How much notice does my insurer have to give before non-renewing my home in California?

At least 75 days before your policy expires, in writing, with the reason stated. If proper notice is not given, CDI says your existing policy stays in effect for 75 days from when the notice is sent.

What is a DIC policy in California?

A Difference in Conditions policy is a companion policy that wraps around the FAIR Plan to cover perils it excludes, like liability, theft and water damage. CDI publishes a list of insurers that offer DIC policies designed for this.

Can I get a mortgage with FAIR Plan insurance in San Diego?

Often yes. Fannie Mae accepts state FAIR Plan coverage when it is the only coverage available at closing. Your lender may have extra requirements, so confirm early in escrow.

Can I get off the FAIR Plan later?

Yes. Ask your broker to re-shop each year, especially as insurers expand under CDI's Sustainable Insurance Strategy and as you finish mitigation work.

Thinking about buying or selling in a higher-risk area?

Insurance is now part of every San Diego deal I work on, from Point Loma canyon lots to East County acreage. I can help you build insurance into your offer timeline and connect you with brokers who actually return calls.

If you just got a notice and want to talk through what it means for a move, reach out. You can find me at aussiejosh.com or call or text 760.704.3820.