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CA Department of Insurance

Commissioner’s order offers Californians more protections under last resort homeowners insurance plan

News: 2016 Press Release

For Release: January 20, 2016
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Commissioner’s order offers Californians more protections under last resort homeowners insurance plan
Changes improve access and coverage under FAIR Plan, especially to fire-prone areas

SACRAMENTO, Calif. — Today Insurance Commissioner Dave Jones issued an Order directing the California Fair Access to Insurance Requirements (FAIR) Plan to make several changes to better ensure Californians have access to basic property insurance.The Order includes enhanced coverage options, eliminates the requirement that consumers prove they were rejected three times for standard insurance, provides greater access to brokers registered with the FAIR Plan, and included other improvements to ensure California consumers have access to property insurance under the FAIR Plan when standard insurers are not willing to provide coverage. The commissioner directed the Department of Insurance last year to review the FAIR Plan in the wake of fires which devastated parts of California. Commissioner Jones met with the FAIR Plan to obtain their input on improvements before issuing the Order.

"Consumers in high risk fire areas who are unable to find standard home insurance can purchase fire insurance through the California FAIR Plan, which was created by the Legislature and Governor to provide fire insurance where it is not otherwise available," said Commissioner Jones. "The changes to the FAIR Plan included in this Order will improve consumer access and the coverages available under the FAIR Plan."

The FAIR Plan was established by legislation in 1968 for consumers who are unable to find coverage in the voluntary insurance market. These consumers can turn to the FAIR Plan to insure their home, property and contents, even if they are turned down by traditional homeowners' insurance companies. As part of the Commissioner's Order, a consumer will no longer be required to present three declinations from insurers in the open market before they can turn to the FAIR Plan for coverage. Commissioner Jones concluded that this rule creates an artificial barrier to obtaining coverage under the FAIR Plan.

"The FAIR Plan was created by statute to ensure access to basic property insurance," commented Anneliese Jivan, President of the FAIR Plan. "We are pleased that the Commissioner has taken these important steps to enhance the FAIR Plan's ability to provide coverage for those who are unable to find it otherwise. We look forward to continuing to work collaboratively with the Commissioner on these and other matters."

The FAIR Plan provides basic property insurance as a last resort to consumers unable to secure coverage in the voluntary market. Consumers looking for coverage through the FAIR Plan can work with the FAIR Plan directly, but are strongly encouraged to find a broker who is registered to write FAIR Plan business to apply for coverage. Currently, there are approximately 6,600 brokers registered with the FAIR Plan. The Order responds to concerns that consumers are having a difficult time identifying brokers who can assist them in applying for coverage. The Order requires the FAIR Plan to include on its website access to a consumer-friendly database where users can easily find registered brokers near them who can help them apply for coverage.

The Department of Insurance found the current property insurance policy offered by the FAIR Plan left consumers at financial risk by not offering optional coverages for costs that are often incurred as a result of a disaster. The commissioner ordered the FAIR Plan to revise its policy to offer optional coverages for the replacement cost of contents and for debris removal.

The commissioner also ordered the FAIR Plan to automatically include its dwelling replacement cost and inflation guard coverage on all eligible dwellings, unless the policyholder specifically declines the coverage. Prior to this Order, consumers had to opt-in to this coverage for which there is no additional charge except for premium increases associated with future increases in the dwelling limit.

"These improvements should increase access to homeowners' coverage, particularly in areas of the state that have struggled to attract traditional insurers," added Commissioner Jones.

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Media Notes:

  • Commissioner's order
  • California FAIR Plan website
  • California FAIR Plan - Frequently Asked Questions

  • The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at Non-media inquiries should be directed to the Consumer Hotline at 800.927.4357. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.

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