Life Insurance

Commissioner orders insurer of last resort to increase commercial coverage limits

California Insurance Commissioner Ricardo Lara is ordering the California FAIR Plan Association to increase coverage limits for businesses that have turned to the insurer of last resort for commercial property insurance.

As part of this decision, Lara amended the FAIR Plan’s plan of operations. Under the changes, the FAIR Plan’s Division I Commercial Property Program would raise its combined coverage limits from $4.5 million to $8.4 million. Likewise, FAIR Plan’s Division II Businessowners Program limits would also be raised from $3.6 million to $7.2 million.

The California Department of Insurance noted in a statement that these coverage limits have not been raised in decades – since at least 1997 for the Division I Commercial Property Program, and 1994 for the Division II Businessowners Program – despite the Consumer Price Index indicating that costs have doubled since the mid to late 90s.

“My order is part of an ongoing commitment to helping businesses in California thrive as our economy recovers from the COVID-19 pandemic,” said Lara in a statement.

The commissioner explained that many business owners have raised concerns with him regarding how difficult it was for them to secure insurance coverage, which in turn impacts their ability to better serve customers.

“Our state’s economic recovery can’t wait. I will no longer tolerate delays from the insurance companies running the FAIR Plan when businesses and consumers need help today,” Lara added. “I will continue to use every tool available to help businesses and protect consumers as we continue to seek long-term solutions to hold the FAIR Plan accountable and responsive to California consumers and businesses.”

Read more: California signs insurance of last resort bill

In July, California Governor Gavin Newsom signed SB 11 into law, which enabled farmers to purchase insurance through the FAIR Plan. The legislation was passed in response to the state’s farmers having difficulty renewing or purchasing coverage since 2019.

What's your reaction?

In Love
Not Sure

You may also like

Leave a reply

Your email address will not be published. Required fields are marked *