Quick summary: Farmers Insurance has removed the monthly cap it previously placed on new homeowners, condo and renters policies in California. The company also filed for an average 6.99% statewide rate increase and says the move ties to California’s new “Sustainable Insurance Strategy,” which aims to encourage insurers to keep writing business in wildfire-prone areas. At the same time, some wildfire survivors and consumer advocates are upset with state insurance reforms and have criticized Insurance Commissioner Ricardo Lara. (Insurance Journal)
What happened (plain and simple)
Late November 2025, Farmers announced it will no longer limit the number of new homeowners, condominium, and renters policies it sells in California. Until now the company had capped new business at about 9,500 policies per month. With the cap gone, Farmers says it plans to add several thousand policies in areas the California Department of Insurance has called “distressed” — and in early 2026 it plans to market directly to roughly 300,000 consumers in those areas. The company also filed for an average 6.99% rate increase across the state. (Insurance Journal)
Why Farmers says it’s doing this
Farmers points to regulatory changes under California’s Sustainable Insurance Strategy. That program makes it easier for insurers to use forward-looking wildfire risk models and to account for reinsurance costs in rates. In short, the state offered insurers faster, clearer permission to adjust pricing in exchange for commitments to keep writing insurance in higher-risk parts of California. Farmers says those rules make it possible for them to expand again. (Insurance Journal)
Why this could matter for homeowners
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More choices in some areas. If Farmers actually writes more policies, homeowners who had trouble finding coverage (or who were forced to the FAIR Plan) may get private insurance options again. Farmers says it expects to add policies in wildfire-distressed ZIP codes. (AM Best News)
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Rates may rise. The 6.99% average statewide increase Farmers filed for means many policyholders could pay more next year if the state approves the rate change. Other insurers have filed similar increases, and regulators have been approving higher rates in 2024–25 to reflect rising losses from catastrophes and higher reinsurance costs. (PR Newswire)
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Fair-plan reliance might fall. The goal of the Sustainable Insurance Strategy is to steer people away from the California FAIR Plan (a last-resort insurer with limited coverage) by getting private carriers to return to high-risk areas. More private policies could mean better coverage options for many homeowners. (Insurance Journal)
The controversy: why some people are upset
Although regulators and insurers present the Sustainable Insurance Strategy as a compromise to stabilize the market, it’s not universally popular.
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Some wildfire survivors and consumer groups say the reforms and some past deals allowed insurers to drop policyholders and pushed families into worse coverage before major fires. In several recent protests and press events, survivors of the January Los Angeles wildfires have urged Governor Newsom to ask Commissioner Ricardo Lara to resign, arguing his office didn’t protect consumers enough. That political pressure has kept insurance policy topics front-page news in California. (CalMatters)
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Consumer advocates point to a 2023 agreement (reported widely) that they say let insurers drop customers in exchange for future rate flexibility — a deal critics say benefitted insurers more than ordinary Californians. Those claims are part of why some residents are suspicious even when carriers say they will expand coverage. (Consumer Watchdog)
What regulators say
California’s Department of Insurance under Commissioner Ricardo Lara has been pushing the Sustainable Insurance Strategy to keep insurers from abandoning the state. The department argues that allowing more realistic pricing (including reinsurance costs and improved wildfire modeling) will keep carriers in the market and lower the need for the FAIR Plan. The department has also asked insurers to help shore up the FAIR Plan after major wildfire losses. Regulators face a hard balancing act: permit higher rates that reflect real risk while protecting consumers from unfair prices or sudden drops in coverage. (insurance.ca.gov)
What this means practically for an average homeowner
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If you already have Farmers, expect communications from the company about the rate filing and possibly new discounts (Farmers’ filings mentioned updates to bundle discounts). If you don’t have Farmers and live in a wildfire-affected area, you might see Farmers offering quotes in 2026 where choices were limited earlier. (PR Newswire)
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Shop around. Removing one carrier’s cap can increase competition, but it does not guarantee lower prices. Compare coverages, limits, deductibles (especially for wildfire or wind), and whether a policy includes living-expense coverage after a covered loss.
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Understand wildfire exclusions and deductibles. Even with more private market options, many policies in higher-risk areas carry specific wildfire deductibles or require risk-reduction steps (like defensible-space work). Don’t assume all policies are the same. (This is standard advice supported by insurer filings and regulatory notes.) (San Francisco Chronicle)
Risks and open questions
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Will insurers actually keep policies long-term? Past years showed insurers can restrict writing or nonrenew large blocks of policies when losses spike. The new rules encourage insurers to stay, but market conditions could change again.
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Will rates climb across the board? Many insurers have requested mid-to-high single-digit increases; some requests exceed thresholds that trigger public hearings. If claims continue to rise, more increases could follow. (San Francisco Chronicle)
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How will consumer protections be enforced? Survivors’ complaints about claim delays and denials have fueled political pressure. The strength of enforcement and oversight will shape whether consumers feel safer with returning private options. (CalMatters)
Simple checklist for California homeowners right now
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Gather your current policy documents (limits, wildfire deductible, replacement cost vs. actual cash value).
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Get at least two quotes if Farmers or other carriers begin marketing in your area. Don’t compare price only — check coverages.
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Ask about wildfire mitigation discounts (home hardening, defensible space) — those can reduce premiums or deductible exposure.
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Keep records and photos of your property; claims after a disaster are easier to handle with good documentation.
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Watch regulator announcements — if a carrier’s rate increase request triggers a hearing, that’s public and you can learn more. (PR Newswire)
Bottom line
Farmers removing its cap is a sign that some insurers feel the new California rules make it feasible to increase writing in high-risk areas. That could bring more choices to homeowners who struggled after recent wildfires. But it is not a silver bullet: rates could rise, consumer advocates remain concerned about past and future insurer behavior, and the long-term stability of the market depends on claims trends, reinsurance costs, and regulatory enforcement. Homeowners should stay informed, compare offers, and take practical steps to reduce wildfire risk at their properties. (Insurance Journal)
Sources & further reading
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Insurance Journal: Farmers Eliminating Homeowners Insurance Policy Cap in California. (Insurance Journal)
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Farmers Newsroom press release on removing the cap and new rating plan. (MediaRoom)
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SF Chronicle coverage: California's second-largest home insurer seeks rate increase, lifts cap on new policies. (San Francisco Chronicle)
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LA Times reporting on wildfire survivors’ calls for actions related to Insurance Commissioner Ricardo Lara. (Los Angeles Times)
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Reuters on FAIR Plan and state efforts after massive wildfire losses.