California Insurance Commissioner Ricardo Lara on Friday ordered the FAIR Plan to implement his mandated increases to its decades-old commercial property coverage limits offered to businesses.
“My order is part of an ongoing commitment to helping businesses in California thrive as our economy recovers from the COVID-19 pandemic,” Lara said in a statement. “A top concern that many business owners large and small have voiced to me are their challenges in getting insurance coverage which, in turn, impacts their ability to serve their customers as best they can.”
Lara’s action increases the combined coverage limits for the FAIR Plan, under its Division I Commercial Property Program, from $4.5 million to $8.4 million and, under its Division II Businessowners Program, from $3.6 million to $7.2 million. These coverage limits have not been raised since at least 1997 and 1994 respectively, according to the California Department of Insurance.
A representative for the FAIR Plan has been reached out to for comment.
Lara’s Order revises the FAIR Plan’s Plan of Operations and gives the FAIR Plan no more than 60 days to file a rule change application for review and approval by the CDI for these new increased commercial coverage limits.
Upon approval, the insurance companies operating the FAIR Plan then have 90 days to implement these plan changes ordered by the commissioner.
The FAIR Plan was required under Insurance Code to submit a revised Plan of Operations to the CDI within 30 days in response to the commissioner’s previous order from October 12 describing how it would increase its commercial property coverage limits.
The commissioner’s action on Friday was taken because of the FAIR Plan’s failure to meet this reasonable and standard deadline, according to the CDI.
The commissioner is invoking his authority under Insurance Code to write the revisions to the Plan of Operations for the FAIR Plan on his own, and is ordering the FAIR Plan to now implement those revisions.
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