CA | Insurance Commissioner Ricardo Lara issued the following statement after a state judge supported his order that the FAIR Plan offer homeowners a more comprehensive homeowners’ insurance policy option.
“This ruling is a win for homeowners and an essential part of our ongoing strategy during this unprecedented time in our state. It upholds my authority to implement measures that enhance the availability and affordability of insurance coverages for consumers. While we continue to pursue long-term insurance solutions to safeguard Californians from climate change, it’s essential that homeowners have a strong short-term option in the California FAIR Plan. Requiring Californians to purchase separate insurance policies only results in higher costs and greater confusion, leaving them on the hook for uninsured damage from a winter storm or burst pipe. Many FAIR Plan policyholders are seniors or families who cannot afford to pay these unexpected costs out-of-pocket. The sooner that the FAIR Plan can offer a more comprehensive policy option, the better for many Californians. This ruling is a step forward in achieving a balanced and robust insurance market that meets the needs of Californians. I will continue to put the needs of California’s insurance consumers first through a sustainable insurance marketplace that serves all consumers.”
The FAIR Plan is California’s “insurer of last resort,” offering a bare-bones residential policy that covers fire and smoke damage but forces homeowners to purchase an additional policy at an increased cost to have coverage for liability, water damage, and other common perils. Many FAIR Plan policyholders do not, and cannot, purchase a Difference in Conditions (DIC) policy, increasing the coverage gap for vulnerable communities. Modernizing the FAIR Plan to meet Californians’ coverage needs is a key goal of Commissioner Lara’s Sustainable Insurance Strategy, which he announced in September. This is the second time a judge has upheld Commissioner Lara’s action, supporting the Commissioner’s goal to restore stability in the property insurance market, including an expanded FAIR Plan policy as a short-term option for homeowners.