SLO Farm Bureau: Changes in CA Insurance Legislation Hopes to Bolster Coverage
California’s new plan is supposed to shore up the insurance market for homeowners. In short, insurance companies that no longer cover wildfire-prone areas of the state will now have an easier path to increasing premium rates in those areas.
San Luis Obispo County Farm Bureau’s Executive Director Brent Burchett fills us in.
“We've got a crisis in California with property insurance rates going up or carriers leaving the state. So, there was a bill that would basically allow folks that had commercial property that was on the fair plan, the fair plan, the California's insurance of last resort. It's very, very cost prohibitive, but it is better than not having coverage at all.”
California homeowners currently unable to get insurance on the private market can currently turn to the FAIR Plan, a last resort issuer of fire coverage backstopped through a levy on regulated insurers. Between 2018 and 2022, the number of homeowners covered by the FAIR Plan more than doubled to roughly 3% of all homeowners. However, the FAIR Plan policies are expensive and limited. And if the FAIR Plan runs out of money, it’s legally required to refill its coffers by levying a surcharge on major insurers. The prospect of the FAIR Plan running out of cash and slapping the industry with the bill has also encouraged insurance companies to scale back their coverage.
“So, we basically tweak that to allow folks that have maybe the residence was on the FAIR Plan to be able to take their commercial property. Think of a winery, a packing shed, or a hay barn store… they’d be able to remove those properties off the FAIR Plan back into the regular commercial marketplace, which would hopefully have a lot more affordable rates.”