Insurance Pool Petitions California Court To Stop Comprehensive Coverage Order

The California FAIR Plan Association has filed a petition asking the Los Angeles Superior Court to direct the state insurance commissioner to either annul, vacate, or withdraw a law stipulating that the insurance pool has to provide comprehensive homeowners’ insurance.

The Fair Access to Insurance Requirements (FAIR) plans were first created in the 1960s to serve as insurance coverages of last resort for those homeowners who live with abnormally high exposure to uncontrollable risks. FAIR plans, however, only offer basic property insurance.

Read more: What are FAIR insurance plans?

According to the California FAIR Plan Association, the state insurance commissioner’s Order No. 2019-2 issued last month runs contrary to the FAIR plan’s statutory mandate, forcing the plans to offer HO-3 policies – comprehensive homeowners’ insurance – and potentially increasing insurance costs for all FAIR plan policyholders.

The association also maintained that the commissioner’s order has a provision that would prevent the FAIR plan from passing along credit card charge fees to customers that select that option to pay for their insurance. By disabling credit card payments, the FAIR plan would be forced to pass the fees to all policyholders to share.

“We have a responsibility to protect our policyholders and ensure their continuing access to affordable and reliable basic property coverage,” said California FAIR Plan Association president Anneliese Jivan.

Jivan said that while the association appreciates the commissioner’s efforts to address the impact of California’s wildfires, 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,” Jivan said.