The California plan has been ordered to include increases to the decades-old business coverage limits.
California Commissioner Ricardo Lara has announced that his office has ordered that the FAIR Plan must incorporate his mandated increases to the limits to commercial property insurance.
The commissioner made the order to boost the coverage limits to better support Californian businesses.
Lara announced that the commercial property insurance changes were meant to support businesses in California.
“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. “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.”
The commissioner’s decision boosts the combined coverage limits through the FAIR Plan in California under the Division I Commercial Property Program through which the limit has been increased from 4.5 million to $8.4 million. It is also raised through the plan’s Division II Businessowners Program, through which the limit rose from $3.6 million to $7.2 million.
The commercial property insurance limits in the state haven’t been changed in decades.
The business coverage limits for the Division I Commercial Property Program hasn’t been raised since 1997. For the Division II Businessowners Program, the limit hasn’t increased since 1994, according to the California Department of Insurance.
The commissioner’s order provides a revision to the Plan of Operations through the FAIR Plan. It also provided the FAIR Plan a maximum of 60 days in which to file a rule change application for the CDI’s review and approval for the new raised limits to business coverage.
Once the approval is achieved, insurers selling commercial property insurance through the FAIR Plan will then have up to 90 days to put the changes into place according to the commissioner’s orders.
The Insurance Code requires the FAIR Plan to submit a revised Plan of Operations to the CDI within 30 days as a response to the October 12 order the commissioner had already made. That describes the way in which its coverage limits will be raised.