Garamendi Eases Access to FAIR Plan

October 13, 2004

In response to rising difficulty consumers now face in securing homeowners insurance following last year’s firestorms, California Insurance Commissioner John Garamendi announced Oct. 13 that he has eased eligibility requirements for the state’s FAIR Plan, the so-called homeowners insurer of last resort.

The Commissioner’s action allows property owners to bypass certain cumbersome application requirements, and effectively expands the areas covered by the program. Since last year’s Southern California wildfires, numerous consumers have complained that they have had difficulty securing homeowners insurance, particularly in high brush areas of the state. In those cases, the Fair Access to Insurance Requirements Plan offers an alternative – a “bare bones” fire policy that will give minimal coverage in case of disaster.

The policy is not inexpensive, and does not offer the complete level of protection a standard policy would provide, but it is an important tool for those who would otherwise go without.

“I want to send a message to consumers that they should never go without homeowners insurance,” Commissioner Garamendi said. “And I want to emphasize to agents and brokers that this plan is now more widely available to property owners that they can’t otherwise insure.

“Among the saddest things I’ve seen during the aftermath of the fires are people who lost their homes and did not have insurance. Not only are their homes gone, but their financial future is now incredibly bleak,” the Commissioner continued. “I want to make sure that everyone who wants insurance has access to it in some form.”

The order, which is effective immediately, allows homeowners to “self-certify” that they have conducted a diligent search in the private market for insurance, but were unable to secure it. Previously, applicants had to provide three written denials from insurance companies to become eligible.

The order also allows those who live in areas not specifically designated as FAIR Plan regions to more easily become eligible for coverage. The FAIR plan historically has served urban and designated brush areas deemed high risk.

“Many Californians, regardless of their location, are finding it more and more difficult to find homeowners coverage,” the Commissioner said. “The FAIR Plan, in its expanded form, will provide a better safety net to help those who can’t find a policy elsewhere.”

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