SACRAMENTO, Calif. (AP) 鈥� California鈥檚 plan that provides insurance to homeowners who can鈥檛 get private coverage needs $1 billion more to pay out claims related to the , the state Insurance Department said Tuesday.
The FAIR Plan is an insurance pool that all the major private insurers pay into, and the plan then issues policies to people who can鈥檛 get private insurance because their properties are deemed too risky to insure. The plans provide high premiums and basic coverage. There were more than 452,000 policies on the Fair Plan in 2024, more than double the number in 2020.
The plan says it's expecting a loss of roughly $4 billion from the and , which sparked Jan. 7, destroyed nearly 17,000 structures and killed at least 29 people. Roughly 4,700 claims have been filed as of this week, and the plan has already paid out more than $914 million.
All insurers doing business in California will have to bear half the cost and can pass on the rest to all policyholders in the form of a one-time fee as a percentage of premiums. Insurers can collect that cost in the next two years. The state Insurance Department must approve those costs.
The plan also expects to receive $1.45 billion in reinsurance to help pay out claims.
Insurers on Tuesday said they鈥檙e committed to helping the recovery process after the fires and that the ability to recoup some of the cost from ratepayers will prevent companies from ending their business in the state.
鈥淭his is essential to prevent even greater strain on California鈥檚 already unbalanced insurance market and avoiding widespread policy cancellations that would jeopardize coverage for millions of Californians,鈥� said Mark Sektnan of the American Property Casualty Insurance Association, the largest national trade association for home, auto and business insurers.
According to the FAIR Plan, 45% of the claims are reported as total losses, 45% as partial losses and 10% as fair rental value.
It鈥檚 the first time the Fair Plan has sought approval for additional money in more than 30 years, the department said.
鈥淚 took this necessary consumer protection action with one goal in mind: the FAIR Plan must pay claims just like any other insurance company,鈥� Insurance Commissioner Ricardo Lara said in a statement. 鈥淚 reject those who are hoping for the failure of our insurance market by spreading fear and doubt. Wildfire survivors can鈥檛 cash 鈥榳hat ifs鈥� to pay for food and rent, but they can cash FAIR Plan checks.鈥�
Tr芒n Nguy峄卬, The Associated Press
