California Insurance Commissioner Ricard Lara announced Thursday that he is taking action against the so-called “FAIR Plan” for inadequate coverage for smoke damage due to fires — three years after investigating it.
The FAIR Plan is California’s “insurer of last resort,” the privately-run but publicly-mandated fire insurance plan for residents who cannot find coverage in the ordinary insurance market. The FAIR Plan offers bare-bones coverage that often does not compensate homeowners fully for their losses.
The terms of the FAIR Plan are so uncharitable, and its operations so opaque, that many homeowners have taken to calling it the “Un-FAIR Plan,” especially because of the way that many have been required to use it.
Thousands of households in fire-prone areas of California have been forced onto the FAIR Plan in recent years because the state has refused to allow insurance companies to raise their rates in accordance with rising risks — whether due to climate change or poor risk management –making it nearly impossible for them to do business in the state.
Lara announced that he had filed an “order to show cause” against the FAIR Plan after complaints since the Palisades Fire and Eaton Fire in January about a “pattern of denying smoke damage claims based on an arbitrary FAIR Plan-defined requirement for ‘permanent physical damage.’” However, his press release noted that his office had already conducted an investigation of the FAIR Plan in 2022 that called for major changes.
In a statement responding to Lara’s announcement, the Eaton Fire Survivors Network said:
Commissioner Lara’s own press release shows that his FAIR Plan market conduct exam was completed in 2022. Yet he took no action until today, three years later.
That delay caused real harm. Eaton and Palisades fire survivors suffered needlessly under FAIR Plan smoke damage denials because Lara failed to act on the findings of his own investigation.
This is exactly why he must now complete and enforce the State Farm market conduct exam—before approving another billion-dollar rate hike.
Smoke damage is caused by exposure to the intense smoke of a fire, which often contains contaminants and leaves a lingering smell or residue that cannot easily be cleaned or removed, rendering objects dangerous or unusable.
Homes that survive fires can still sustain smoke damage that requires the destruction of contents and the remediation of interiors, including the removal of drywall, floors, insulation, and other components.
Joel B. Pollak is Senior Editor-at-Large at Breitbart News and the host of Breitbart News Sunday on Sirius XM Patriot on Sunday evenings from 7 p.m. to 10 p.m. ET (4 p.m. to 7 p.m. PT). He is the author of Trump 2.0: The Most Dramatic ‘First 100 Days’ in Presidential History, available for Amazon Kindle. He is also the author of The Trumpian Virtues: The Lessons and Legacy of Donald Trump’s Presidency, now available on Audible. He is a winner of the 2018 Robert Novak Journalism Alumni Fellowship. Follow him on Twitter at @joelpollak.
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