Insurance Commissioner Ricardo Lara orders FAIR plan to offer California homeowners increased coverage options

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2021 California Monument Fire – Engine crew battles the flames
Credit: USFS

Insurance Department has fought insurance companies in court to assert Commissioner’s authority to force California’s “insurer of last resort” to offer homeowners a full coverage option

September 25, 2021 – SACRAMENTO, California – Insurance Commissioner Ricardo Lara on Friday ordered the FAIR plan to offer a home insurance policy, in addition to its current fire coverage, with more traditional features for homeowners, such as the coverage for water damage, theft, and loss of use. The order requires the FAIR plan to submit a revised plan of operations to the insurance department within 30 days.

The commissioner’s order comes after the California FAIR Plan Association (“FAIR Plan”), an association made up of all insurance companies eligible to be the “insurer of last resort of state property,” continued Commissioner Lara to challenge her original November 2019 order. A court recently upheld the Commissioner’s power to require the FAIR plan to offer more comprehensive policies to homeowners to residents in need, especially in areas with high priority. state forest fire risk.

“The risk of forest fires intensified by climate change threatens consumers across the state with non-renewal of home insurance, forcing consumers to build up coverage or risk greater losses,” the said. Commissioner Lara, who also issued several standstill orders to prevent insurance companies from issuing cancellations and non-renewals to wildfire survivors. “In light of the court ruling, it’s time for the FAIR plan to stop delaying and do what’s right for consumers and provide more comprehensive coverage. I will continue to use all available tools to protect consumers as we continue to seek long-term solutions. “

The order will give approximately 200,000 Californians who currently rely on the FAIR plan to protect their homes a more comprehensive option on top of the basic coverage that the FAIR plan currently offers today. Requiring the FAIR plan to offer a more comprehensive home insurance policy will prevent consumers from having to purchase a second supplemental insurance policy to cover other risks such as premises liability, water damage and flight.

These changes are in addition to previous changes that Commissioner Lara succeeded in forcing the FAIR plan to undertake last year, including increasing the combined coverage limit from $ 1.5 million to $ 3 million, offering more transparency in their Steering Committee meetings and allowing the Insurance Department to participate in these meetings, and mandating the FAIR Plan to seek Departmental approval before returning any operating profit to participating insurers.

Although the FAIR plan is intended as a temporary solution, it is important that its product reflects traditional coverage as much as possible. Many California homeowners have already been affected by planned utility power outages, mandatory evacuations and repeated threats of wildfires year after year. Requiring those same homeowners to have multiple policies bundled together for full coverage is needlessly onerous and can be very costly.

“After meeting with thousands of California homeowners across the state who are struggling to find insurance coverage to protect their homes, I implemented a three-part consumer protection plan,” added the Commissioner Lara. “My ministry has worked to empower consumers, expand consumer protection after a disaster, and ensure businesses and homeowners have a competitive insurance market for their insurance coverage. By listening directly to homeowners, neighborhood associations, local businesses, and local and state governments, we create long-term solutions while being responsive to the immediate needs of consumers.

Today’s action comes after Commissioner Lara’s Monday order to insurance companies to preserve residential insurance coverage for more than 325,000 policyholders who have been affected by the devastating northern wildfires of California in 22 counties. Its mandatory ordinance – as seen in Bulletin 2021-06 – follows the governor’s seven emergency declarations this summer and provides protection against one-year insurance company-initiated non-renewals for policies of Insurance of residential property within the perimeter or adjacent postcode of a declared forest fire disaster, whether or not they have suffered a loss, including the Dixie, Caldor, River, Tamarack, Antelope, McFarland, Monument fires , Fly and Cache.

Remarks:

  • Order of Commissioner Lara to the FAIR plan
  • In November 2019, Commissioner Lara ordered the FAIR plan to offer a comprehensive policy that is more akin to a traditional home insurance policy, in addition to its current fire coverage only, so that a homeowner who doesn’t has not been renewed or who has not been able to obtain similar coverage from an insurance company could obtain this full coverage from the FAIR plan. Without the commissioner’s order, homeowners are forced to purchase costly and inconvenient “difference in terms” coverage in addition to their FAIR plan “house fire” policy in order to obtain insurance coverage similar to that of the FAIR plan. amount of coverage they previously had in the voluntary market. .
  • Los Angeles Superior Court Judge Mary Strobel released her ruling on July 12, 2021, which the ministry received on July 19, 2021, significantly upholding the commissioner’s power to order broader coverage options for consumers. She ordered the commissioner to remove “certain liability coverages that have no link, link or link with the insured property” and resubmit her order to the FAIR plan for immediate implementation.
    Source: CA.Dept. insurance


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