California to overhaul comprehensive home insurance following widespread wildfires

Comprehensive home insurance - house on fire

Homeowners who lost their coverage due to fire threats will have access to plans next year.

Californian homeowners who have been struggling with the loss of coverage due to wildfire threat will soon have comprehensive home insurance available to them once again.

A new state-mandated plan has been created to make sure residents can obtain coverage.

California Insurance Commissioner Ricardo Lara issued an order for this new comprehensive home insurance plan last Thursday. It was a response to the catastrophic wildfires that have left devastation in their wake in the state over the last several years. Thousands of homes have been destroyed by the wildfires. Claims for insured damage have been extremely costly to insurance companies.

As a result many insurers have dropped fire insurance coverage for homes located in areas at a higher risk of wildfires. This has forced most of them to turn to the state-mandated insurance pool called the California Fair Access to Insurance Requirements (F.A.I.R.) Plan. The F.A.I.R. Plan is obligated by state law to issue policies to residents who are unable to obtain coverage through no fault of their own.

The comprehensive home insurance plan is meant to overcome the shortcomings of the FAIR Plan.

Among the primary problems for consumers looking to the F.A.I.R. Plan policies is that it is frequently limited to fire damage coverage. Therefore, homeowners must purchase a policy through the F.A.I.R. Plan but also buy a separate plan to cover their homes against any other type of peril, such as theft, water, liability and others.

On California Insurance Commissioner Ricardo Lara’s orders, on June 1, 2020, the F.A.I.R. Plan will be required to start selling comprehensive home insurance policies. This will allow consumers to purchase coverage through the plan that will include wildfire damage as well as water damage, theft, falling objects, and liability, among others. Lara also ordered a doubling of the homeowners’ coverage limits on Comprehensive home insurance - house on fireApril 1, bringing it to $3 million. Moreover, policyholders will also be able to make their monthly premiums payments using electronic funds transfers or credit cards without having to pay any additional fees for those transaction methods.

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