Thousands of homes have been destroyed in
recent years by devastating wildfires across
the state. Those claims have cost insurers, who
responded by dropping fire insurance policies
for many homeowners who live in wildfire-
prone areas.
The insurance industry has said annual losses
from wildfires are not sustainable.
In California, people who can’t buy home
insurance through no fault of their own
can purchase plans from a state-mandated
insurance pool. But policies sold through the
California Fair Access to Insurance Requirements
Plan are often limited to fire damage, forcing
people to purchase separate plans to get
coverage for things other than fires.
Last month, Lara ordered the FAIR Plan to begin
selling comprehensive policies by June 1 to
cover lots of other problems, including theft,
water damage, falling objects and liability. He
also ordered the plan to double homeowners’
coverage limits to $3 million.
Last week, the California FAIR Plan Association
sued Lara, arguing his order is illegal. It said state
law only requires the plan to sell basic property
insurance. It argued Lara’s order would hurt
the private insurance market, which conflicts
with the FAIR Plan’s state-mandated goals of
encouraging “maximum use” of the “normal
insurance market.”
Known as the “insurer of last resort,” the
FAIR Plan has been growing in recent years
as wildfires have become bigger and more
frequent because of climate change.Image: Noah Berger