Everything we covered in this series applies to landlords too. However, rental property insurance adds a few layers that owner-occupants never see. If you own property in Pasadena or the San Gabriel Valley and live elsewhere, these differences matter.
Rental Property Insurance and the FAIR Plan
The FAIR Plan does insure rentals. Its dwelling policy covers one-to-four unit properties rented to a tenant for at least one year. It also covers seasonal rentals, meaning those rented for less than a year. Buildings with five or more units fall under its commercial policies instead.
However, the FAIR Plan calls its coverage a temporary solution. It is basic fire insurance, and it applies only when a traditional carrier will not write the property. So your broker has to search the standard market first.
What Rental Property Insurance Through the FAIR Plan Leaves Out
As we covered in Part 6, the FAIR Plan dwelling policy does not include liability, water damage, or theft. For a landlord, the liability gap matters most. A tenant or a guest can get hurt on a property you may not visit often.
A difference in conditions policy, or DIC, fills those gaps. It is a separate purchase from a separate insurer. Therefore, you pay two premiums to approximate one standard policy.
Lost rent needs a closer look. The FAIR Plan policy includes fair rental value coverage. However, it pays only for the shortest time needed to repair the damage, and only up to the limit on your declarations page. Before you rely on it, ask your broker to confirm the time period and the limit in writing.
Why Rental Property Insurance Costs Are Rising
Carriers have pulled back from this market. In 2025, State Farm won emergency approval for rate increases. According to Marcus & Millichap, multifamily owners could see premiums rise by up to 38%.
Meanwhile, the FAIR Plan’s 29.1% average increase took effect on October 15. That figure is a statewide average, so your actual change depends on the property. In Altadena, the average FAIR Plan premium is $3,089 a year. Buyers who find standard coverage there pay 20 to 40% more than they would for a comparable Pasadena property.
What to Do Before You Buy or Sell a Rental
If you are buying, get a real insurance quote before you finalize your numbers. Then use that premium in your income projections. Also ask the seller for the current policy declarations. A premium that looks fine today may not survive the next renewal.
If you are selling, expect the same questions from your buyer. A current quote and a clean claims history make your property easier to underwrite.
Absentee owners have one more task. Confirm that your carrier has your current mailing address. Otherwise, a renewal or nonrenewal notice can reach the property instead of you.
Some of the pressure appears to be easing. In its August 3, 2026 release, the Department of Insurance reported that FAIR Plan growth slowed to 1.9% in the second quarter. It also estimated that about 24,000 policies left the plan in April and May. For investors, that suggests more standard-market options may return over time.
In the final post, we look at what all of this means in Altadena and Pasadena specifically.
Jeffrey Kam, MBA
Broker/Owner, Green Street Real Estate
Sources: California FAIR Plan, Dwelling Policy · Marcus & Millichap, California Multifamily Property Insurance Special Report · California Department of Insurance, August 3, 2026