FAIR - California's Insurer Of Last Resort - Runs Out Of Money; $1 Billion From Emergency Assessment On The Way
California’s home insurance plan of last resort has run out of money to pay the wave of claims stemming from the Los Angeles fires and will receive a bailout of $1 billion, state regulators announced Tuesday.
The decision to grant the plan’s request for a cash infusion comes in the aftermath of two of the most destructive fires in the state’s history, which destroyed roughly 6,800 structures in the Pacific Palisades neighborhood and about 9,400 in the suburb of Altadena last month. Since then, the FAIR plan has been inundated with claims for damage by homeowners who lost everything — and who had not been able to get coverage on the private market. To date, the plan has paid out $914 million to policyholders, a figure that is expected to grow.
To continue to pay claims, the plan asked California Insurance Commissioner Ricardo Lara to approve a $1 billion assessment of its membership, which is made up of the insurance companies that do business in the state. Insurers, in turn, are allowed to pass on a portion of that cost to their policyholders, potentially raising the cost of home insurance across the state. In a statement, Lara defended the assessment as necessary to protect the FAIR plan’s ability to pay out claims. “Wildfire survivors can’t cash ‘what ifs’ to pay for food and rent, but they can cash FAIR Plan checks,” he said.
The FAIR plan’s bailout is the latest indication that California’s home insurance market is on shaky footing. In recent years, as climate change has fueled droughts and baked vegetation bone-dry, increasingly destructive fires have torn through cities and towns across the state, racking up growing losses for insurance companies. State Farm, the largest insurance company in California, has fled wildfire-prone areas. Last year, it did not renew nearly 70 percent of policies in the Palisades Zip code, leaving residents increasingly reliant on the FAIR plan.
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https://www.washingtonpost.com/weather/2025/02/11/fair-plan-payment-property-insurance/
https://wapo.st/4jWSVNK