California’s FAIR Plan is set for a major update to address ongoing issues in the state’s insurance market. Insurance Commissioner Ricardo Lara stressed that modernizing the FAIR Plan is essential for stabilizing the market and improving coverage options for consumers.
The FAIR Plan, created over 50 years ago as a last-resort insurer, has faced growing reliance due to traditional insurers withdrawing from high-risk areas. This has led to fewer choices for consumers and increased dependence on the FAIR Plan, risking its financial stability.
Key changes under the reform include:
Expanded Coverage: New commercial coverage options with limits up to $20 million per building and increased residential policy limits.
Financial Stability: Enhanced financial protections for policyholders in extreme loss scenarios.
Improved Transparency: Increased public reporting on FAIR Plan activities and customer service.
These updates aim to reduce reliance on the FAIR Plan by strengthening the overall insurance market. The reform has been supported by various groups, including the California Farm Bureau and the California Association of Winegrape Growers, who see it as vital for improving insurance availability and stability in high-risk areas.