California FAIR Plan lifts commercial coverage limits to $20M
Prior to an increase in 2022, limits for these policies hadn’t been changed for more than two decades, according to the California Department of Insurance.
The coverage limits on commercial property policies offered by California’s FAIR Plan Association, the state’s insurer of last resort, are more than doubling, according to the California Department of Insurance (CDI).
The FAIR Plan is an association that includes all insurers authorized to “transact basic property insurance in California,” CDI reported.
Under a new agreement signed by California Insurance Commissioner Ricardo Lara and FAIR Plan President Victoria Roach, limits for FAIR Plan’s Division I Commercial Property program will increase from $8.4 million to $20 million per location, while the Division II “Businessowners” program will see limits grow 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,” Roach said in a release. “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.”
These actions will improve access to fire insurance for businesses as well as multi-resident properties in high-risk areas, according to State Senator Marie Alvarado-Gil, who said in a release: “My constituents are directly impacted by the lack of available fire insurance coverage and I applaud the Insurance Commissioner and California Fair Plan leadership for working together to implement this necessary increase in the coverage limit.”
CDI reported these increases have been in the works since July 2022, and were sparked by a hearing the department held into the FAIR Plan. During the hearing, agriculture groups, business owners, homeowners associations, youth recreational camps and other stakeholders spoke on the need for higher limits.
In March 2022, both of these programs had their limits increased: Division I Commercial Property limits went from $4.5 million to $8.4 million and the Division II Businessowners program limit was increased from $3.6 million to $7.2 million. Before 2022, the limits on these programs had not been raised since at least 1997 and 1994, respectively, CDI reported.
“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,” Lara said in a release. “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.”
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