Insurance Commissioner Ricardo Lara and the California FAIR Plan Association have agreed to increase commercial coverage limits to $20 million for businesses unable to find coverage in the normal insurance marketplace.
This adjustment more than doubles existing coverage limit options for businesses in the state, which had not been adjusted in more than two decades prior to Commissioner Lara taking office in 2019.
The FAIR Plan is an association comprised of all insurers authorised to transact basic property insurance in California, and designed to be the state’s property “insurer of last resort,” writing coverage for businesses and residences when other insurance options are not available.
The agreement, signed by Commissioner Lara and FAIR Plan President Victoria Roach, will increase the combined coverage limits for the FAIR Plan, under its Division I Commercial Property Program, from $8.4 million to $20 million per location and, under its Division II Business Owners Program, from $7.2 million to $20 million per location.
“The FAIR Plan is committed to strengthening consumer choice in the voluntary insurance market and ensuring all Californians have access to basic property coverage,” said Roach.
“We appreciate Commissioner Lara’s leadership to take this step forward to address the challenges in the current commercial coverage market, while attempting to balance those challenges with the need for stability in the insurance market.
“We welcome the opportunity to continue collaborating with the Department of Insurance, the Legislature and other stakeholders to restore a viable insurance market for all Californians regardless of where they reside.”
According to the announcement, the new coverage limits will take effect after the FAIR Plan submits a new rule filing for approval by the Department of Insurance. The FAIR Plan has 60 days to submit a rule filing to the Department, with the goal of the Department approving these coverage limit increases, meaning coverage could be available in the fourth quarter.
Commissioner Lara commented: “Giving businesses greater options for insurance coverage is a top priority of mine. I am pleased the FAIR Plan is stepping up when insurance companies fall short in providing businesses and homeowners access to the coverage they need.
“I will continue working to expand coverage options and drive down the costs of insurance through wildfire safety discounts and increasing competition in the market.”
Business groups like the Community Associations Institute California Legislative Action Committee, the California Farm Bureau, and the California Collaboration for Youth, have welcomed the additional coverage.
“California’s diverse farms need more than a one-size-fits-all solution for insurance,” said California Farm Bureau President Jamie Johansson. “Increased FAIR Plan coverage limits give farm families greater options and security to plan for the future. We thank Commissioner Lara for continuing to support our agricultural community.”