How California FAIR Plan Discounts Really Work

Published Date: 07/02/2024

As California’s wildfire crisis intensifies, homeowners across the state are turning to the California FAIR Plan — the state’s insurer of last resort — for coverage that many traditional insurers no longer offer.

But even as more people join the FAIR Plan, confusion remains about how its discount system works, especially when it comes to home hardening and defensible space.

In a recent episode of Insurance Hour, insurance expert Karl Susman addressed a wave of listener questions about these topics — clearing up what qualifies for discounts, what certifications are needed, and why doing “half the list” won’t earn partial savings.

If you’ve ever wondered how to qualify for FAIR Plan discounts or why your premium hasn’t gone down despite major fire safety upgrades, this is for you.

What the California FAIR Plan Is and Why It Matters

The California FAIR Plan Association was created in 1968 to ensure that every homeowner could obtain basic fire coverage, even in high-risk areas.

It’s not a state agency — it’s a pool of private insurance companies collectively funding coverage for those who can’t find policies elsewhere.

In recent years, however, the FAIR Plan has become more than just a “last resort.” As wildfires, reinsurance costs, and regulatory delays have driven private insurers out of the market, the FAIR Plan now insures hundreds of thousands of homes once covered by standard carriers.

“The FAIR Plan exists to give people coverage when the admitted market won’t,” Susman explained. “But because it’s heavily regulated, it doesn’t have the flexibility private carriers do.”

That regulation extends directly to its discount structure, which is governed by state rules — not discretionary decisions by the FAIR Plan.

What “Home Hardening” Means for FAIR Plan Discounts

Home hardening refers to construction and maintenance practices designed to make a structure more resistant to fire.

The FAIR Plan offers discounts in two separate categories:

• Home Hardening (the structure itself)
• Defensible Space (the area surrounding the property)

Each category has its own checklist of required items. To receive a discount, homeowners must complete all items in a category.

“There are two groups of things you can do,” Susman explained. “One group applies to your home, and another to the area around your home. You have to do all of the things in one category to get that discount. You can’t do half of each and expect a price break.”

The Official FAIR Plan Discount Form

Many homeowners don’t realize the FAIR Plan publishes a one-page checklist that clearly outlines all mitigation requirements.

This document — officially called the Mitigation Discounts Form — is available on the FAIR Plan’s website and lists:

• Exact home hardening requirements
• Defensible space clearance standards
• Required documentation and certifications

“If you can’t find the form online, email me,” Susman said. “I’ll send you a copy. It literally lists everything you need to do, step by step.”

This form is the authoritative guide for qualifying for discounts.

Home Hardening Discount Requirements

The home hardening discount applies only to features that make the structure itself more fire-resistant. Common requirements include:

• Class A fire-rated roofing (metal, tile, or composition shingles)
• Ember-resistant attic and soffit vents
• Noncombustible siding and decking
• Tempered glass windows
• Enclosed eaves and decks

To qualify, every required upgrade in this section must be completed.

“If you do everything required for the home itself, you’ll get one discount,” Susman said. “But you must do every item. You can’t pick and choose.”

Defensible Space Discount Requirements

The defensible space discount applies to mitigation work performed around the property. Typical requirements include:

• Clearing vegetation within 100 feet of the structure
• Trimming tree branches at least 10 feet from the roof
• Removing dead plants, leaves, and pine needles
• Maintaining fuel breaks and fire-safe zones

As with home hardening, complete compliance is required for this discount.

“You could do everything around the house and nothing to the house itself — that’s fine,” Susman explained. “But you only get the discount for that portion. The same goes for the house.”

Why There Is No Partial Credit

One of the most common misconceptions about FAIR Plan discounts is that partial mitigation should result in partial savings.

That is not how the program works.

“You can’t do half of each category and expect a discount,” Susman said. “You either complete all the steps for home hardening, all the steps for defensible space, or both. That’s how the discounts are structured.”

This all-or-nothing approach has frustrated many homeowners who have made significant investments but still fall short of full compliance.

Still, Susman reminded listeners that the primary goal is survival, not just savings.

“The goal isn’t just to save money — it’s to keep your home from burning down,” he said.

Why the FAIR Plan’s System Is So Rigid

Unlike private insurers, the FAIR Plan operates under strict regulations approved by the California Department of Insurance.

This means:

• All discount programs must be filed and approved by regulators
• Qualifications must be uniform statewide
• No discretionary exceptions are allowed

“They can’t just add new discounts on the fly,” Susman explained. “They’re literally following what’s written into regulation.”

This structure promotes consistency, but it severely limits flexibility.

Certification and Verification Requirements

Listeners also asked what proof is required to receive discounts and whether full compliance is mandatory.

For defensible space, many counties issue clearance certificates under Public Resources Code Section 4291, which mandates vegetation management in fire-prone areas.

For home hardening, proof may include:

• Contractor invoices
• Inspection reports
• Photographs of completed upgrades

“The form will tell you exactly what’s needed,” Susman said. “But yes, you have to be fully compliant for each section. There’s no halfway.”

Why Your Premium Might Not Drop Even After Mitigation

Even homeowners who fully qualify for one or both discounts may see only minimal reductions in their FAIR Plan premiums.

That’s because:

• The discount percentages are relatively small
• Base rates continue to rise due to wildfire losses
• Reinsurance and construction costs remain elevated

“Even if you do everything right,” Susman acknowledged, “you’re still in a system that’s struggling.”

Why Mitigation Still Matters Financially

While immediate savings may be modest, the long-term benefits of mitigation are substantial.

Hardened homes are significantly more likely to survive wildfire events, and future regulatory reforms are expected to dramatically expand mitigation-based discounts.

Under the Sustainable Insurance Strategy introduced by Commissioner Ricardo Lara, mitigation efforts are expected to play a much larger role in future rate filings for both the FAIR Plan and private insurers.

“You’re not just protecting your property,” Susman said. “You’re investing in a system that’s changing.”

Insuring High-Value Homes Under the FAIR Plan

One listener asked whether homes valued above $3 million could still be insured.

Susman clarified that the key distinction is market value vs. replacement cost.

“We have to define what you mean by a three-million-dollar home,” he said. “Are you talking about market value or replacement cost? Because that makes a huge difference.”

Many high-value homes are insured through specialty and surplus lines markets such as Chubb, PURE, or AIG Private Client Group, depending on location and claims history.

Key Takeaways for Homeowners

Homeowners navigating FAIR Plan discounts should remember:

• Obtain the official FAIR Plan discount form as your checklist
• Complete every requirement in a category to qualify
• Maintain full documentation and certifications
• View discounts as secondary to protection
• Expect stronger incentives as reforms advance

Final Thoughts

California’s wildfire risk isn’t disappearing — but the way the state insures against it is evolving.

The FAIR Plan’s rigid discount structure may feel frustrating today, but it represents the groundwork for broader reform. As modernization accelerates, mitigation will become not only a safety measure but a financial advantage.

“At the end of the day,” Susman said, “the goal isn’t to save fifty bucks a year. The goal is to save your house.”