Published June 10, 2026 · Last updated June 10, 2026
The foster family agency insurance crisis in California: what's verified, what to do
California's nonprofit foster family agencies are navigating the hardest liability insurance market in the state's human services sector. Most insurers have left the class, the dominant risk pool has pulled back, and premiums have risen sharply — while agencies legally need liability coverage to operate. Here is what's verified, with sources, and what an agency can actually do at renewal.
This page follows the same rule as everything we publish: every factual claim below is sourced — to the California Department of Insurance, the Legislature, or named journalism — and linked so you can read the originals. Where something is unknown, we say so.
What is happening with foster family agency insurance in California?
As of June 2026, California’s roughly 200 nonprofit foster family agencies face a severe liability insurance shortage. The California Department of Insurance reported in August 2024 that most insurers had left the market and that a single nonprofit risk pool covered about 90% of FFAs — and that pool has since moved away from renewing FFA coverage.
Source: California Department of Insurance notice, August 23, 2024 — Commissioner Lara's formal request to all licensed property/casualty insurers to begin or expand FFA liability coverage, which states that many of the state's more than 200 nonprofit FFAs were "on the verge of losing their risk pooling liability coverage, without which they cannot legally operate."
Why did the FFA insurance market collapse?
Reporting by CalMatters traces the turn to abuse-claim litigation: the dominant risk pool stopped renewing FFA policies after a $25 million jury award against a Santa Rosa agency, and claim volume grew after 2019 legislation lifted the statute of limitations for childhood sexual abuse claims. Agencies report premium increases in the range of 200–400%.
Source: CalMatters, March 2026, which also reports more than two dozen FFA closures across 13 counties since 2024, a figure it attributes to the Department of Social Services.
What has the state done about it?
Three things so far. AB 2496 (2024) limited FFA liability — an agency answers for its own negligence, not a public entity’s — and voided contract clauses making FFAs indemnify counties for county negligence, with key provisions sunsetting January 1, 2027. The 2025–26 budget added one-time funds reported at $31.5 million to help agencies absorb premiums. The Insurance Commissioner formally asked carriers to enter the market.
Sources: AB 2496 (2024) (bill text) · The Imprint, 2025 (budget appropriation, news-sourced) · CDI notice.
Does the state’s foster care insurance fund cover FFAs?
No. The Foster Family Home and Small Family Home Insurance Fund, established under Health & Safety Code section 1527.1, pays certain claims on behalf of foster family homes and resource families — the individual caregivers — not the agencies that certify and support them. Agencies need their own liability program.
Statute: Health & Safety Code § 1527.1.
What should an FFA do at its next renewal?
Start far earlier than feels natural — months, not weeks. Assemble the full underwriting story: loss runs, social-worker caseloads and supervision structure, training and screening procedures, AB 2496-updated county contracts, and any claims narrative with what changed. Then have a broker canvass every market writing the class, because terms vary widely and few markets quote it.
What's still unknown — and worth asking at every renewal: whether new markets enter in response to the Commissioner's request, what happens when AB 2496's liability provisions sunset in January 2027, and whether further state support follows the one-time budget funds. We track this market; changes will be reflected here with dates.
Related: Abuse & molestation coverage · Group home & STRTP insurance · All human services resources