Start shopping for homeowners insurance the week your offer is accepted, and for a hillside or canyon-edge home, before you write the offer. The goal is a written quote that meets your lender's requirements before you remove your insurance contingency. The current California purchase agreement gives insurance its own contingency, separate from the loan contingency.
For most homes in the flatter, built-out parts of Orange County, coverage is still routine. Homes next to open space, on hillsides or along canyons (the wildland-urban interface in parts of Yorba Linda, Anaheim Hills, Orange, Laguna Niguel and Mission Viejo) can take longer to place, cost more, or end up on the California FAIR Plan plus a second policy.
This article is general information, not legal or insurance advice. Confirm coverage with a licensed insurance agent or broker, and contract questions with a real estate attorney.
Why insurance became a deal factor
According to the California Department of Insurance (CDI), insurers decide where to write policies and how to price them using their own wildfire risk models. In recent years traditional insurers retreated from some higher-risk areas while FAIR Plan enrollment grew.
The state's response is the Sustainable Insurance Strategy, which CDI completed in December 2024. It lets insurers use forward-looking catastrophe models in rate-setting, requires those models to credit mitigation, and conditions their use on major insurers writing policies in wildfire-distressed areas equal to at least 85% of their statewide market share. The first rate filing under the new rules took effect in March 2026.
In August 2026, CDI reported that FAIR Plan growth slowed to 1.9% in the second quarter, the third straight quarter of slower growth, and that 11 homeowners insurance groups had committed to stay and grow in California. Options are returning, but you only learn what a specific house can get by applying.
When to shop in the purchase timeline
The California Association of Realtors (C.A.R.) purchase agreement, as revised in December 2025, gives insurance its own contingency: you have 17 days after acceptance to confirm you can get acceptable coverage, unless the parties write in another number. Earlier versions of the form folded insurance into the investigation contingency, so check which version your contract uses. Not being able to get insurance is a reason to cancel under the insurance contingency, not the loan contingency, and once you remove it that protection is gone.
Here is the sequence we use. Our step-by-step guide to buying a home in California covers the rest of escrow.
- Before the offer on a hillside or open-space home, have an insurance agent or broker run the address for a preliminary read.
- Right after acceptance, apply in earnest, using your inspection report to answer questions about the roof, systems and updates.
- Ask the seller about past insurance claims, since claims history can affect pricing and eligibility.
- Before removing the insurance contingency, have a written quote that meets your lender's requirements and fits your budget.
- Before closing, bind the policy and send proof of coverage to your lender and escrow.
If quotes are still out near the deadline, your agent can request an extension, which requires the seller's written agreement. For budgeting, see the true cost of owning a home in Orange County.
What your lender will require
For conventional loans sold to Fannie Mae, the current Selling Guide requires:
- Coverage on a replacement cost basis, except that roofs need not be insured at replacement cost.
- A "special" form policy or equivalent covering fire or lightning, explosion, windstorm, hail, smoke, aircraft, vehicles, and riot or civil commotion, plus a separate policy for any excluded peril.
- A deductible no higher than 5% of the coverage amount.
- An insurer meeting minimum financial-strength ratings from AM Best, Demotech, Kroll Bond Rating Agency or S&P Global.
Freddie Mac uses the same 5% deductible ceiling. Fannie Mae accepts a FAIR Plan policy when it is the only coverage obtainable at closing, but the other requirements still apply. FHA, VA and jumbo loans have their own rules, so ask your loan officer early. Our financing team can line up the loan and the policy together.
The FAIR Plan and difference in conditions coverage
The California FAIR Plan is an association of insurers that provides basic fire coverage when the traditional market will not. CDI calls it a last resort and recommends shopping the regular market first. You apply through a licensed agent or broker registered with the FAIR Plan.
Its dwelling policy covers named perils only: fire or lightning, internal explosion and smoke, with coverage capped at $3 million for all coverages combined. It does not include the water damage, theft, liability and additional living expense coverage of a standard homeowners policy.
A difference in conditions (DIC) policy from a private insurer fills that gap; CDI recommends the pairing and lists insurers that write DIC policies. You will pay two premiums, so get both quotes before removing contingencies and have your lender confirm the combination works.
A broker may also be able to place coverage with a surplus lines insurer. Those insurers are not backed by the California Insurance Guarantee Association, and CDI's oversight of them is more limited. CDI encourages FAIR Plan policyholders to shop the market regularly, so re-shop at renewal.
Condos and townhomes: HO-6 vs the HOA master policy
In a condominium, the association generally insures the building structure and common areas under a master policy. Your unit owner policy, usually called an HO-6, covers the unit's interior, your belongings, liability and loss of use, and can include loss assessment coverage if the association bills owners for a covered loss.
Fannie Mae requires a unit owner policy when the master policy does not cover the unit's interior or improvements, or has a per-unit deductible. During HOA document review, ask for the master policy declarations and check who insures what. CDI notes the FAIR Plan's commercial option has been providing temporary coverage for some HOAs. See our guide to buying a condo in Orange County.
Standard homeowners and condo policies generally exclude earthquake and flood. California insurers must offer earthquake coverage for an added premium, and flood coverage is available through the National Flood Insurance Program.
Fire hazard severity zones and your Natural Hazard Disclosure
CAL FIRE's Office of the State Fire Marshal classifies Fire Hazard Severity Zones as moderate, high or very high based on factors such as vegetation, slope and fire weather. Orange County's updated maps for Local Responsibility Areas, where local government handles fire protection, were released March 24, 2025. It was the first comprehensive revision since 2007, when local maps showed only very high zones, so some homes are now mapped for the first time. Cities adopt the maps by ordinance and cannot lower the state's designations.
The zones measure hazard, not the chance a particular house is damaged, and CDI has stated the CAL FIRE maps are not used for insurance rates or underwriting decisions. They do drive building codes, defensible space rules and seller disclosures.
The Natural Hazard Disclosure (NHD) statement required by Civil Code section 1103.2 tells you whether the property is in:
- A FEMA special flood hazard area or a dam failure inundation area
- A high or very high fire hazard severity zone
- A wildland area that may contain substantial forest fire risks and hazards
- An earthquake fault zone or a seismic hazard zone
If the NHD arrives after your offer is accepted, you may cancel in writing within three days of in-person delivery, or five days if mailed or delivered electronically.
In high or very high zones, sellers of homes built before January 1, 2010 must give a fire-hardening notice, disclose known ember-vulnerable features such as vents that are not ember resistant, untreated wood shake roofs and single-pane windows, and, since July 1, 2025, identify completed low-cost retrofits from a state list. Sellers in these zones must also provide defensible space documentation where it applies, or sign an agreement for the buyer to obtain it, generally within one year after closing.
To check a property, search the address on the State Fire Marshal's Fire Hazard Severity Zone viewer or your city's map; Laguna Niguel and Mission Viejo both offer address search.
Mitigation steps that can earn discounts
California's Safer from Wildfires regulation, adopted in 2022, requires insurers to offer discounts for specific steps. CDI lists them as:
- A Class A fire-rated roof
- Ember- and fire-resistant vents
- Noncombustible material on the bottom 6 inches of exterior walls
- Enclosed eaves
- Upgraded windows, either multi-pane glass or added shutters
- A 5-foot ember-resistant zone, including replacing wood fencing attached to the house with metal
- Cleared vegetation and debris under decks
- Combustible sheds and outbuildings removed to at least 30 feet from the home
- Compliance with defensible space rules
- Community participation in Firewise USA or a Fire Risk Reduction Community
CDI says each action qualifies for a discount, but amounts differ by company, and the FAIR Plan has its own wildfire-hardening discounts. Insurers must also share a property's wildfire risk score and allow consumers to appeal it. Your inspection report and photos can document items like roof class and vent screens.
How Remark Homes helps
Our buyer agents raise insurance at the showing stage, not the week contingencies expire. For hillside and open-space homes we suggest an insurance check before the offer, build realistic quote timelines into the insurance contingency, and track every contract deadline. We review the NHD, fire-hardening disclosures and HOA master policy with you, and coordinate with your lender on coverage requirements. Learn how we represent buyers, or start your California buyer representation agreement online.
Frequently asked questions
Can I cancel a purchase if I can't get homeowners insurance?
The current C.A.R. purchase agreement has a separate insurance contingency, 17 days by default (older versions put insurance under the investigation contingency), so you can generally cancel during that period if you cannot get acceptable coverage. After you remove it, the protection is gone.
Does being in a fire hazard severity zone raise my premium?
CDI says the CAL FIRE maps are not used for insurance rates or underwriting; insurers price wildfire with their own risk models. The zone does affect disclosures, defensible space rules and building codes.
Will my lender accept a California FAIR Plan policy?
Fannie Mae accepts a FAIR Plan policy when it is the only coverage available at closing, but its other insurance requirements still apply. Confirm a FAIR Plan and DIC combination with your lender before removing contingencies.
Do I need my own policy if the HOA has a master policy?
Usually, yes. The master policy generally covers the structure and common areas, while an HO-6 covers your interior, belongings and liability.
How do I check whether a home is in a fire hazard severity zone?
Search the address on the State Fire Marshal's viewer or your city's adopted map, and read the Natural Hazard Disclosure report during escrow.
Sources
- California Department of Insurance: Top Ten Tips for Finding Residential Insurance
- California Department of Insurance: Safer from Wildfires
- California Department of Insurance: FAIR Plan growth slows below 2% (August 2026)
- California Department of Insurance: CAL FIRE hazard maps do not affect insurance
- Fannie Mae Selling Guide: B7-3-02, Property Insurance Requirements for One- to Four-Unit Properties
- Public.Law: California Civil Code section 1103.2, Natural Hazard Disclosure Statement
