California FAIR Plan asks state for major increase for home insurance coverage

The California FAIR Plan, the state’s backup insurance provider, is asking to raise its coverage rates by an average of 35.8%.

That’s according to a recent filing with the Department of Insurance by the state-created, but privately funded, plan.

Hilary McLean, a spokesperson for the plan, said the main driver “of the increase is attributable to the wildfire portion of the premium.”

The request is just the first step in a department review process and the rate hike that is ultimately approved could be lower.

The number of people using the FAIR plan for fire insurance has increased dramatically in recent years as companies have pulled back business in the state due to losses caused by major wildfires arising from risks due to climate change and other factors.

The plan is funded by insurance companies that do business in the state. As of June, the plan had 590,642 residential policies in place, more than double the total it had just three years earlier. Earlier this year, following the devastating Los Angeles-area fires, the plan was allowed to seek $1 billion from insurance companies, half of which could ultimately be paid for by policyholders from those companies.

McLean said the plan was working with the department to “ensure its rates reflect the current risk portfolio, expenses and growth as the state’s insurer of last resort.”

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