Commissioner Lara and FAIR Plan reach agreement to increase commercial coverage limit to $20 million

As part of his comprehensive effort to give more insurance options to California residents and businesses, Insurance Commissioner Ricardo Lara announced last week the California FAIR Plan Association has agreed to more than double its existing commercial coverage limits to $20 million for businesses unable to find coverage in the normal insurance marketplace. The FAIR Plan is an association comprised of all insurers authorized 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.  Commissioner Lara and the FAIR Plan have been working on this issue since the Commissioner’s investigatory hearing into the FAIR Plan last July where homeowners associations, youth recreational camps, agricultural groups, and other businesses spoke about the growing need for greater commercial coverage limits.   Association President/CEO Roger A. Isom testified at that hearing specifically asking for an increase to at least $20 million in coverage.  “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,” said Commissioner Lara.  Today’s 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 Businessowners Program, from $7.2 million to $20 million per location.  State legislators, including Senator Toni Atkins and Senator Susan Rubio joined Commissioner Lara’s call for an increased commercial coverage limit at the FAIR Plan in letters sent earlier this year.  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.