California Insurance Commissioner orders mandatory $3 million policy limits in FAIR Plan

SACRAMENTO, Calif. - Confusion among Californians over the FAIR Plan insurance option.

This is known as "the insurer of last resort" for those who've lost or can't get insurance, through no fault of their own, something we are seeing more of in our communities, particularly those in hillsides surrounded by brush. 

Since 2015, insurance companies have refused to renew nearly 350,000 policies in high fire risk areas, forcing many people to turn to the California Fair Plan Association's FAIR Plan. It is a private association, essentially a pool, comprised of all insurers licensed to write up property insurance in California. 

However, its bare-bones fire policy is capped at $1.5 million dollars -- which, for many Californians, is not enough. 

On Thursday, California Insurance Commissioner, Ricardo Lara, ordered that the FAIR Plan policies begin covering other problems such as theft, water damage, falling objects and liability. Lara ordered that be in place by June 1, 2020.

Lara also ordered double the coverage limits to $3 million dollars by April 1, 2020. 

Anneliese Jiva, president of the California Fair Plan Association, called Lara's order "misguided" and said forcing more comprehensive policies could "hurt consumers."

The FAIR Plan, which Commissioner Lara oversees, was established under California law and is intended as a "temporary solution." 

To read the Commissioner's order, click the following link: insurance.ca.gov/0400-news/0100-press-releases/2019/upload/nr089FAIRPlanOrder111419.pdf