State Farm’s New “Wildfire Fee” in California Shifts Costs to Homeowners
FOR IMMEDIATE RELEASE
October 16, 2025
Contact: contact@insurancefairnessproject.com
State Farm’s New “Wildfire Fee” in California Shifts Costs to Homeowners
October 16, 2025 – Starting December 1, State Farm will impose a temporary supplemental wildfire fee on California policyholders, 1.13% for homeowners and renters (for two renewal cycles), 2.25% for other personal lines (for one renewal), and 0.26% on commercial property policies (for one renewal). The surcharge is meant to help the company recover its share of a $1 billion assessment levied by the California FAIR Plan after January’s catastrophic wildfires devastated parts of Los Angeles.
“Insurers helped create the crisis they’re now making homeowners pay for,” said Charles Slidders, Senior Attorney at the Center for International Environmental Law. “They’ve known for decades that climate change would drive more frequent and intense wildfires, yet continue to invest in fossil fuels and underwrite the very oil and gas projects driving the crisis. California must confront this hypocrisy head-on and require insurers to divest from fossil fuels.”
Consumer advocates say policymakers should be rethinking how to structure climate resilience and insurance fairness. Senator Adam Schiff’s INSURE Act (S.2349) offers one possible model. Section 3 of the bill proposes a “loss prevention partnership” between insurers and policyholders, encouraging companies to help fund home upgrades and mitigation measures, such as fire-resistant roofs or defensible space. In return, participating insurers could access a new federal reinsurance program to manage catastrophic losses.
Research from Headwaters Economics supports this approach, emphasizing that wildfire resilience requires both individual home hardening and community-level investment, not just higher premiums or new surcharges. Their findings suggest that prevention-focused investments can dramatically reduce long-term losses while keeping insurance markets viable in high-risk areas.
“The insurance system is set on squeezing people for every last cent. California can’t build a fair or sustainable insurance market if we keep asking homeowners to shoulder the costs of the industry’s climate exposure,” said Lizzy Price, a spokesperson for the Insurance Fairness Project. “Rather than being stuck in a cycle of rate hikes and withdrawals, we should be looking at ways to reduce risks. Insurance companies should be a partner in those efforts as it benefits their long-term viability.”
The surcharge exposes a growing gap between how insurers and regulators approach climate risk and how those costs ultimately fall on ordinary Californians. With the FAIR Plan’s solvency in question and major insurers threatening to exit the market, this issue could set the tone for national debates about who should bear the cost of climate-driven disasters - insurers, regulators, or homeowners themselves.
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