January 23, 2020 The Newspaper Serving LGBT Los Angeles

California FAIR Plan For Fire Insurance Sees Massive Rate Increases

By Karl D. Susman

The California FAIR Plan Association was created in July 1968 following a series of brush fires and riots in the 1960s. Since then, it has been the organization of last resort for agents and brokers to obtain basic fire insurance for their clients. Times are certainly changing. Due to the multiple brush fires throughout California over the last several years, most insurers have either stopped writing fire insurance in many areas while others have filed for massive rate increases. Non-admitted insurance companies have also begun to increase premiums significantly to the tune of over 500% or more while FAIR plan is taking rate increases over 20%.

The standard and even substandard market for homeowners and fire insurance is tightening
Karl D. Susman

It is no surprise as the standard and even sub-standard market for homeowners and fire insurance tightens more agents and brokers are looking to place their clients with the FAIR plan. The FAIR plan has enacted new guidelines for eligibility on new business being written through the organization. Brokers submitting applications to the FAIR Plan will now be required to e-certify that a diligent search was made as mandated by the California Insurance Code. The certification states that a diligent search has been completed as pursuant to California Insurance Code section 10093(a). This states in part that the Broker has made an attempt to place this risk with a standard insurer prior to submitting the application to the FAIR plan.

Additionally, recognizing the extremely limited coverage that the FAIR plan offers, a recent bulletin was sent to agents and brokers to remind them that the policies they offer do not cover such things as water damage, liability, theft, worker’s comp etc. This bulletin to me signifies the fact that the FAIR plan knows it will be seeing claims for these types of losses and they are putting producers on notice to be certain and obtain that important coverage elsewhere.

The FAIR plan may be seeing more claims, so customers are receiving a new checklist with policies and renewals.

Karl D. Susman

Supplemental coverage for a FAIR plan policy comes in many forms, most frequently a Difference in Conditions policy (DIC). In addition, FAIR plan policyholders are receiving a new insert with their new policies and renewal policies. This insert includes an “Annual Insurance Checklist for FAIR Plan Policyholders” and lists items such as “Shop around at least annually for coverage with other insurers” and “Call insurance companies on your own.” It also states to contact your Broker with questions about coverage including coverage that is not offered by the FAIR plan. Finally, it goes as far as to say that reviewing the coverage you have is “your responsibility” and it is underlined just like that. It seems clear by notices sent to agents and FAIR plan policyholders that the message is get better coverage elsewhere. So if the FAIR plan is telling us to look elsewhere for better coverage and even provides a list of types of coverage to look for, the begging question is are people going to pay attention now or is this just a massive claim bubble waiting to burst?

I believe that not only are agents and brokers going to be in for a huge influx of claims from FAIR plan customers who thought they had more coverage, pointing to these continual reminders and warnings from FAIR plan will do little to protect them from the onslaught of potential litigation that will follow. At some point a permanent solution will need to be found to solve the chronic risk that now exists in California; wildfires. There is absolutely precedent for this too.

Other states have either state or federal programs for chronic risks already in place such as the National Flood Insurance Program for Flood damage, Windstorm Insurance, Hurricane insurance and more. Remember the concept of insurance is to insure against the potential for a loss. When there is an almost certainty for a loss then it isn’t possible for private insurers to shoulder the losses that will come.

Karl Susman, owner of Susman Insurance Agency in Los Angeles, California has been helping clients obtain insurance for over 26 years.  He also is an Insurance Expert Witness for complex litigation. 

Related Posts

GUEST COLUMN: Queer Mindfulness Meditation

January 22, 2020

January 22, 2020

InsightLA is a non-profit meditation center offering practices of mindfulness and compassion that are both secular and Buddhist in origin. ...

Honoring Gay Rights & Civil Rights Activist Bayard Rustin

January 21, 2020

January 21, 2020

On this day in history 67 years ago, gay civil rights organizer Bayard Rustin was arrested on a discriminatory, anti-gay...

New CA Bill to End the Epidemics of HIV, Hepatitis C and Other STDs in LGBTQ+ Community

January 18, 2020

January 18, 2020

Senator Scott Wiener (D-San Francisco) recently introduced a bill that would require state agencies to create and enforce a master...

WeHo Dodgeball at the Sin City Classic LGBTQ+ Sports Festival

January 17, 2020

January 17, 2020

Hosted annually by The Greater Los Angeles Softball Association (GLASA), Sin City Classic brings together the United State’s finest athletes for a...

LONG BEACH PRIDE Unveils New Logo, Drops “Lesbian & Gay” From Name

January 16, 2020

January 16, 2020

Formerly known as  the Long Beach Lesbian and Gay Pride, the new and improved Long Beach Pride – the organization...

VIDEO: Grand Opening of Los Angeles LGBT Center’s New Campus in South LA

January 15, 2020

January 15, 2020

‘Center South’ will provide HIV testing; access to PrEP and PEP services; housing case management; mental health services; a computer lab; and...

Craigslist Man Extorts Angelinos, Santa Monicans with Gay Sex, Pleads Guilty

January 10, 2020

January 10, 2020

Tyler Buchanan faces 10 years in federal prison By Sam Catanzaro A man has pleaded guilty to using Craigslist, among...

Honoring Timothy Dean One Year Later

January 8, 2020

January 8, 2020

An intimate gathering was held Tuesday, Jan. 7 at West Hollywood Park to honor the 1-year anniversary of 55-year-old fashion...

LGBTQ+ Ally Taylor Swift to Receive GLAAD’s Vanguard Award

January 7, 2020

January 7, 2020

GLAAD announced Tuesday, Jan. 7 that Taylor Swift with receive the Vanguard Award at the 31st Annual GLAAD Media Awards. ...

Three CA Bills for the LGBTQ+ Community to Keep An Eye On

January 6, 2020

January 6, 2020

Three key pieces of California legislation that were tabled last year for various reasons will see the floor in 2020. ...

New LGBT Center to Serve Community in South LA

January 1, 2020

January 1, 2020

The Los Angeles LGBT Center will be growing yet again.  On January 11, the Center will open its south campus...

Top 12 Pride LA Stories of 2019

December 31, 2019

December 31, 2019

As this year quickly comes to a close, we begin to reflect. Where we were, how far we’ve come. We...

TRAVEL REVIEW: LGBTQ+ Family Vacation: Holiday Edition – Las Vegas

December 21, 2019

December 21, 2019

This column is the second in a reoccurring series about LGBTQ+ family travel. For a preview of this travel column,...

West Hollywood, Long Beach Earn Top Marks in 2019 Equality Index

December 20, 2019

December 20, 2019

2019 was a great year for the LGBTQ+ communities in West Hollywood and Long Beach.  Both cities earned a score...

LGBT Center to Host Viewing Party for Tonight’s 2020 Democratic Debate

December 19, 2019

December 19, 2019

No sure where to watch the chaos of the next 2020 Democratic Candidate debate? The Los Angeles LGBT Center’s got...