Fight over fire insurance coverage heats up in California

The statewide FAIR Plan has asked a court to block an order from the insurance commissioner

Homeowners Frances Mann-Craik and Jim Craik, from left, along with their two Cardigan Corgis Piper and Tobby pose for a photograph at their home in a wooded area north of Castle Rock State Park in Los Gatos, Calif., on Wednesday, Sept. 11, 2019. With the heart of fire season approaching, the couple recently had to scramble to find new homeowners insurance after CSAA (AAA) sent them and many of their neighbors non-renewal notices. (Anda Chu/Bay Area News Group)
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Homeowners’ fight for fire insurance coverage is heating up in California.

After an order from the state’s insurance commissioner to expand coverage options, a statewide, insurance industry-backed program meant to be a last resort for homeowners who can’t find a traditional policy has gone to court to try to put a stop to the changes.

On Friday, the FAIR Plan filed a petition asking the Los Angeles Superior Court to force Commissioner Ricardo Lara to “annul, vacate, or withdraw” the order he issued last month.

As fires have ravaged California, insurance companies have increasingly refused to provide fire insurance to many of the state’s residents most at risk of being affected by wildfires — from the Santa Cruz mountains to the Oakland hills. As a result, many homeowners have been forced to the bare-bones FAIR Plan, which offers less coverage for more money than many traditional policies.

Last month, the commissioner ordered the plan — which is funded by insurance companies — to begin offering what’s known as an HO-3 policy, a more comprehensive plan than it has offered in the past. He also said the plan needed to increase coverage limits from $1.5 million to $3 million and allow residents to pay by credit card, with a monthly payment option.

Now, while the FAIR Plan says it supports most of those changes, it is pushing back at the order to offer more comprehensive coverage, saying it will raise costs for homeowners and arguing the order is outside the plan’s mandate to provide basic insurance coverage.

“We appreciate the efforts of the commissioner to address the impact of California’s devastating wildfires on homeowners,” said Anneliese Jivan, president of the California FAIR Plan Association, in a statement. “Unfortunately, this order, as written, would negatively impact consumers and further destabilize the voluntary insurance marketplace because the order provides no incentive for the private market to offer insurance in areas at risk of wildfire. We regret having to take this action, but we will do everything we can to continue to protect policyholders and provide stability in the insurance marketplace.”

The FAIR Plan also alleged the order could compromise the privacy and security of policyholders’ financial data. And it balked at the fact that the order prevents the plan from passing credit card charge fees to customers who go that route.

In a statement, the FAIR Plan said it had hoped to work with Lara and the legislature but “recognizes that this path forward is no longer viable.”

Lara’s office did not immediately respond to a request for comment.

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