The FAIR plan, which is a state program to provide coverage to customers who can’t find it elsewhere, including in fire-prone areas, will raise limits for commercial properties such as condominiums, the California Department of Insurance said Friday in outlining an agreement with the program.
However, it could take up to eight months before the coverage will be available, so it’s not a remedy for property owners scrambling to find coverage in the present.
The planned changes raise the coverage available from $20 million per location to $20 million per building, up to a total of $100 million per location, an effort to ease the strain on homeowners’ associations and other commercial property owners. The higher limits will be available for three years
As enrollment in the plan grows, this means its liabilities will increase in the short-term, but the state is responding to “an immediate need,” said Michael Soller, a spokesperson for the insurance department.
In the four months since a Bloomberg Green investigation revealed how California’s FAIR plan was largely unprepared for the rising risks and costs of wildfires, the state has proposed numerous changes designed to bring private insurers back to California to reduce the number of homeowners relying on the last-resort program.
The FAIR plan has other problems as well, as it is being sued by residents across the state who allege the coverage provided fails to meet minimum legal requirements, leaving them uncompensated for smoke and fire damage. The FAIR plan declined to comment on pending litigation.
US Representative Adam Schiff, a California Democrat, has proposed a federal reinsurance program to stifle soaring home insurance rates, which are affecting property owners in other states as well, including Florida, Louisiana and Colorado.