Lara approves major FAIR Plan expansion to help HOAs, builders, farmers, and businesses access insurance coverage

Insurance Commissioner Ricardo Lara announced the approval of the California FAIR Plan Association's commercial filing to increase commercial property coverage limits.

This move is a key element of Lara's ongoing Sustainable Insurance Strategy and continues the implementation of landmark reforms to address California's property insurance crisis.

This action by Lara increases the FAIR Plan's Division I Commercial Property coverage limits to $20 million per building, with a total $100 million maximum limit per location. The FAIR Plan must make these new coverage limits available to all eligible applicants for both new and renewal policies within 120 days from today's approval date — or sooner — as stipulated in Lara's binding Order No. 2024-2.

"This targeted FAIR Plan expansion helps meet the urgent needs of homeowners associations, affordable housing developers, farmers, builders, and business owners who are being priced out or left without coverage altogether," said Lara. "It is a short-term solution with long-term benefits — providing necessary insurance access while we continue implementing comprehensive reforms to restore a competitive and reliable market in California."

The FAIR Plan, California's insurer of last resort operated by a consortium of insurance companies, has grown significantly as traditional insurers retreat from high-risk areas, placing further strain on the market. This growth has created what experts call a "hidden crisis" that threatens long-term solvency and consumer choice.

Lara's action aims to help break the cycle of insurer withdrawal and continued FAIR Plan expansion, which can result in increased costs and fewer options for consumers statewide.

The expansion of limits aligns with the binding legal agreement reached in 2024 between Lara and the FAIR Plan, requiring the FAIR Plan to offer this broader commercial coverage while improving its transparency and financial stability.

"Commissioner Lara's action to expand commercial property coverage is a crucial step for home builders and land developers who have struggled to obtain coverage, especially in high-risk areas for condominiums and affordable housing," said Dan Dunmoyer, President and CEO of the California Building Industry Association. "These reforms bring us closer to a more predictable and reliable insurance marketplace that will provide consumers with more housing options to own or to rent at a reduced cost."

"The CALIFORNIA ASSOCIATION OF REALTORS® supports Commissioner Lara's efforts to expand insurance availability and address growing gaps in coverage," said C.A.R. President Heather Ozur. "Increasing FAIR Plan coverage options is a necessary part of a broader solution that will help more Californians and transactions succeed in this challenging market."

"This modernization of the FAIR Plan is a long-overdue win for community associations," said Stacie Donnelly, Chair of the Community Associations Institute – California Legislative Action Committee. "Commissioner Lara's reforms will help more associations access appropriate levels of coverage, improving financial security and stability for residents. With updated limits and enhanced oversight, this reform gives HOAs a path to navigate the changing insurance market."

"The California Farm Bureau applauds Commissioner Lara's leadership in strengthening the FAIR Plan. For our farmers and ranchers, especially in wildfire-prone regions, access to adequate insurance has become a growing challenge," said Shannon Douglass, President of the California Farm Bureau. "The increase in coverage limits and focus on financial stability offers meaningful relief to agricultural operations that form the backbone of our rural communities. These actions are vital to ensuring California agriculture remains resilient."

This latest step builds on Lara's July 2024 announcement of a landmark FAIR Plan modernization agreement — part of what he has called "the most significant insurance reform since Proposition 103."

That broader strategy includes

Requiring insurers to cover more homes in wildfire-distressed areas and depopulate the FAIR Plan to bring its policyholders into the admitted market

Allowing forward-looking catastrophe modeling and accurate reinsurance costs in the rate making process

Improving transparency and speed in rate reviews

Strengthening the FAIR Plan's solvency and customer service

Incentivizing community-wide wildfire mitigation and home hardening efforts

"We are moving urgently but responsibly to create lasting reform," said Lara. "Every part of my Sustainable Insurance Strategy is designed to deliver stability now and restore competition and choice for California consumers in the future."

The FAIR Plan is required to notify insurance brokers of the new coverage limits via a Broker Bulletin prior to implementation and must submit documentation to the Department of Insurance once that communication is complete.

Lara emphasized that delays in implementing this action would undermine the stability all stakeholders are working to achieve.