Insurance Commissioner Orders Changes to California’s FAIR Plan

California’s Commissioner, Ricardo Lara, issued two very important press releases at the end of last year. The releases contained important information on a variety of changes for the ever-volatile home insurance market in California.

FAIR Plan Changes

Effective December 5, 2019

Commissioner Lara issued a mandatory one-year moratorium on non-renewals for more than 800,000 homeowners throughout the state. The moratorium applies to homeowners near a wildfire disaster area. The state’s website has a list of all zip codes that are included on the moratorium for reference, which you can find by clicking here. The moratorium is intended to allow various government offices and insurers time to identify a long-term insurance solution for homeowners in wildfire prone areas. According to the state website, these actions help:

  1. More than one million homes and rentals
  2. 3.6 million homes in the wildland urban interface
  3. More than 180 zip codes
Effective February 1, 2020

The FAIR Plan will be offering more flexible billing options: there will be the option to make monthly payments with a credit card or bank account without any fees. This is a significant improvement from the current billing system that only offers full pay or three pay, and payments can only be made by check or ACH payment.

Effective April 1, 2020

The California FAIR Plan will be increasing their maximum coverage limit from $1.5 million to $3 million. The FAIR Plan is the insurer of last resort and many of the homeowners coming to us need more than the $1.5 million that’s currently offered.

Effective June 1, 2020

The Commissioner ordered the FAIR Plan to expand its coverage and offer a full homeowners policy in addition to its current limited fire-only policy. This item has been extremely divisive and is being contested. We do not expect that the complete homeowners policy will be offered by FAIR Plan in 2020, if ever.

What Perils Are Currently Covered by the California FAIR Plan?

FAIR Plan property insurance policies are “named peril” or “fire only” policies, meaning that only the causes of damage specified in your contract will be covered. The current version of California FAIR policies include coverage for only the following:

  • Fire
  • Lightning
  • Internal explosion
  • Smoke
  • Vandalism or malicious mischief (optional coverage that can be added so long as your house has not been vacant or unoccupied for more than a month)
  • Windstorms, hail, explosion, riots and civil commotion, aircraft, vehicular damage, volcanic eruptions (optional coverage that will increase your premium to add)

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