When the California FAIR Plan announced changes effective October 15, 2026, the word “cuts” spread quickly through broker networks and landlord forums. What is being cut matters: the October 15 changes reduce broker commissions, not the amount of property insurance commercial policyholders can purchase. That distinction is this article’s most important point, and getting it wrong leads to decisions based on a misunderstanding of what is changing.
Old Harbor Insurance serves landlords and commercial property owners across California and helps clients understand what the October 2026 changes mean for their specific policies, coverage structures, and renewal timelines.
What Is Actually Changing on October 15, 2026
On August 17, 2026, the California FAIR Plan sent brokers an announcement restructuring commissions for policy terms effective on or after October 15. The changes apply to Dwelling Fire, Commercial, Commercial High Value, and Business Owners Policy lines. California Earthquake Authority business is not affected.
| Policy Type | New Business (Before) | New Business (After) | Renewal (Before) | Renewal (After) |
| Dwelling Fire | 10% | 7% | 8% | 3% |
| Commercial | 10% | 7% | 8% | 3% |
| Commercial High Value | 10% | 7% | 8% | 3% |
| Business Owners Policy | 10% | 7% | 8% | 3% |
The renewal commission reduction from 8% to 3% is a 62.5% cut in broker compensation on affected renewals. According to IIABCal’s official response, the FAIR Plan broker agreement permits unilateral commission changes, so there is no legal channel to reverse the decision. California Code of Regulations Section 2189.3 also prohibits brokers from adding fees to FAIR Plan policies to offset the reduction, so the commission cut cannot be passed directly to policyholders as a surcharge.
What Else Changes on October 15
Alongside the commission restructuring, the California Department of Insurance approved a statewide average rate increase of 29.1% effective the same date. Rate changes apply at renewal, not mid-term. A commercial policyholder renewing after October 15 will face both the new rate structure and the reduced broker compensation environment simultaneously. Some properties will see increases above the statewide average depending on location and risk profile; others may see smaller increases or no change.
How the October Changes Affect Landlords
The practical impact for landlords depends on which policy type they carry and when their policy renews.
Single-Family and Small Rental Property Owners
Rental properties classified under Dwelling Fire coverage are among the affected lines. Landlords with properties renewing on or after October 15 will see the new premium rates applied at that renewal. The commission change does not alter what the policy covers or reduce coverage limits.Â
Understanding how claims are handled under a FAIR Plan dwelling fire policy matters more than the commission structure, since the policy remains a named-peril product covering fire, smoke, and a limited set of other perils without automatic liability or rental income coverage.
Apartment Building Owners
According to the California FAIR Plan’s commercial coverage page, apartment buildings with five or more units typically fall under commercial coverage rather than dwelling fire. These owners face the same commission restructuring on their commercial policies.Â
Larger apartment buildings should also review whether their insured value reflects current replacement costs. The FAIR Plan raised its commercial limits to $20 million per building for high-value properties, but that higher limit has a sunset date of July 26, 2028, discussed below.
Rental Income, Liability, and Coverage Gaps
The FAIR Plan’s commercial fire policy does not automatically include loss of rental income, commercial general liability, or coverage for tenant-owned property. Landlords who rely on a FAIR Plan policy without supplemental coverage are exposed to these gaps regardless of the October commission changes.Â
A Difference in Conditions policy paired with the FAIR Plan addresses many of these exposures, and most commercial lenders require one.
What the Changes Mean for Business Owners
Business Owners Policies through the FAIR Plan are included in the October 15 commission restructuring. Retail property owners, office building owners, and operators in other commercial categories should confirm which policy type their building is classified under and when their next renewal falls.
Commercial Buildings and Coverage Limits
The FAIR Plan’s commercial coverage page lists eligible property types including retail stores, offices, manufacturing facilities, construction projects, farms, and wineries. Commercial fire coverage through the FAIR Plan is a named-peril policy. It covers specified perils rather than providing the broad all-risk protection of a standard commercial property policy.Â
Exclusions typically include flood, earthquake, commercial general liability, business interruption, and equipment breakdown unless separately endorsed or covered by a supplemental policy.
What to Ask Your Broker Before Renewal
The American Agents Alliance warned publicly that the 62.5% reduction in renewal commissions may affect how some agencies prioritize FAIR Plan business going forward. Before your next renewal, confirm:
- Whether your current broker will continue servicing your FAIR Plan policy
- Whether they are actively searching for private market alternatives at each renewal
- What documentation they need from you to support a private market application
- Whether your current coverage limits reflect current replacement costs
- Whether a supplemental DIC policy is in place for liability, income, and water damage
The July 2028 High-Value Commercial Coverage Sunset
The October 15 commission changes are separate from a longer-term commercial coverage deadline that larger property owners need to track.
Understanding the $20 Million Per-Building Limit
California expanded FAIR Plan commercial limits to $20 million per building, responding to the needs of larger apartment complexes, HOA associations, and commercial portfolios with high replacement costs. Under FAIR Plan Stipulation and Order No. 2026-2, no new or renewal High Value Commercial Property policy may begin after July 26, 2028. Policies issued on or before that date may continue for their permitted policy term. After the sunset, the standard commercial maximum applies.
What Owners of Multi-Building Properties Need to Know
For properties with multiple buildings, the distinction between per-building and per-location limits matters significantly. A property with three buildings whose individual replacement costs each approach $20 million may have aggregate exposure that exceeds what the FAIR Plan can cover per location. Owners of large portfolios or multi-structure commercial properties should review coverage structures well before the 2028 deadline rather than treating it as a distant concern.
October 2026 vs. July 2028: Two Separate Changes
| Date | What Changes | Who Is Affected |
| October 15, 2026 | Broker commissions reduced; average 29.1% rate increase | All affected policyholders renewing on or after this date |
| July 26, 2028 | High Value Commercial policy sunset | Owners with commercial policies above standard limits |
The Case for Re-Shopping the Private Market
On June 19, 2026, the CDI reported that Zurich US submitted a commercial property rate filing under California’s updated regulatory framework, with a commitment to expand commercial property coverage in wildfire-distressed areas. Under the Sustainable Insurance Strategy, insurers using forward-looking wildfire models and accounting for reinsurance costs are required to write at least 85% of their statewide market share in wildfire-distressed areas.
For commercial property owners, the practical takeaway is that private market options are more likely to exist now than two years ago. Triggers worth acting on include an upcoming renewal, completed mitigation work, a change in occupancy or building use, recent renovations, or newly available carriers in your ZIP code.
How Old Harbor Helps Landlords and Commercial Property Owners
Working across 81 A-rated carriers means Old Harbor Insurance can search admitted carriers, surplus lines markets, and specialty commercial programs simultaneously for your specific property. For landlords and business owners reviewing their FAIR Plan coverage ahead of October renewals, that market access is particularly relevant given the rate increase, the commission restructuring, and the emerging private market options worth exploring.Â
Contact us to review your current commercial coverage structure. Get a quote to compare what the private market currently offers for your property.
Frequently Asked Questions
Are California FAIR Plan commercial coverage limits being reduced in October 2026?
No. The October 15, 2026 changes reduce broker commissions, not coverage limits. New business commissions drop from 10% to 7%, and renewal commissions drop from 8% to 3% for affected policy types. A separate regulatory change, the high-value commercial coverage sunset, takes effect July 26, 2028, and affects properties with coverage above the standard commercial maximum.
Will my commercial FAIR Plan premium increase in October 2026?
Yes, for policies renewing on or after October 15. The California Department of Insurance approved a statewide average rate increase of 29.1% effective that date. Individual increases vary by property, location, and risk profile. The commission reduction is a separate change that affects brokers rather than directly affecting your premium amount.
Can my broker charge me extra to cover the commission cut?
No. California Code of Regulations Section 2189.3 prohibits producers from adding fees to FAIR Plan policies. The commission reduction cannot legally be passed to policyholders as a surcharge or service fee. Confirm this directly with your broker if the topic arises at renewal.
Does the October 2026 change affect my rental property’s dwelling fire coverage?
Yes, if your property is classified under a Dwelling Fire policy that renews on or after October 15. The 29.1% average rate increase applies to that renewal. The commission change affects your broker’s compensation but does not alter what the policy covers, its limits, or your renewal terms.
What is the July 2028 FAIR Plan commercial coverage deadline?
Under FAIR Plan Stipulation and Order No. 2026-2, no new or renewal High Value Commercial Property policy may begin after July 26, 2028. Owners relying on coverage above the standard commercial maximum should begin reviewing private market alternatives well before that date rather than waiting until the sunset creates urgency.
Does the FAIR Plan commercial policy cover loss of rental income or liability?
Not automatically. The FAIR Plan’s commercial fire policy covers named perils including fire and smoke. Loss of rental income, commercial general liability, and water damage are not standard components. Most lenders require a Difference in Conditions policy layered on top of FAIR Plan commercial coverage to address these gaps, particularly for financed properties.
Should I switch to private commercial insurance before October 15?
If your policy renews before October 15, 2026, the current commission rates and existing premium structure apply to that renewal. Whether to pursue a private market alternative depends on availability for your property, cost comparison, and coverage differences rather than the commission change alone. The rate increase taking effect October 15 is a stronger reason to compare alternatives at your next renewal than the commission restructuring itself.