FAIR plan upgrades not enough for Nevada County homeowners
When California Insurance Commissioner Ricardo Lara came to Grass Valley in August to discuss issues with the FAIR homeowners insurance plan, Marjorie Quist, desperate and determined for answers, raised her hand high and would not put it down until the panel took her question.
Last week, Lara announced changes to the FAIR plan that would enhance coverage and increase convenience for policy holders, but Quist said despite the improvements she still has more questions than answers.
The California Department of Insurance announced that starting next year the FAIR plan would double its coverage from $1.5 million to $3 million, expand its policy to offer more of what a traditional insurance policy would cover — like coverage for personal liability and water damage — and would offer a no-fee monthly payment plan.
“People forced to use the FAIR Plan as temporary insurance deserve the same coverage provided by traditional insurers,” Lara said in a news release. “This crisis requires the FAIR Plan to provide a comprehensive option for Californians who have no other option for homeowners insurance.”
The FAIR plan was originally created as a means to cover those who could not get a policy in the voluntary insurance market. It was supposed to be temporary, an “insurer of last resort,” but it’s increasingly been the only option for more and more homeowners in California as the voluntary market refuses to insure area of elevated fire danger, which includes most of Nevada County improved parcels.
Just from 2017 to 2018 the number of Nevada County residents whose insurer initiated a policy non-renewal jumped from 776 to 1,071, while the number of new FAIR plan policies increased from 176 to 235.
After having homeowners insurance on the voluntary market for more than 50 years with no claims, Quist’s policy was not renewed last year, forcing her to take the FAIR plan after exhausting all other options. She said she’s had to face rising costs, dealing with brokers to bundle insurance and the uncertainty of what to do next, even with the new insurance regulations.
“That’s not going to help me,” Quist said. “I have to figure out how I’m paying for insurance by the end of the year.”
SUPERVISOR: steps in right direction
Quist said while she’s grateful something is being done, even with more improvements to her FAIR plan, it’s nothing compared to the insurance plan she’s had on the voluntary market.
Laurence Stewart had homeowners insurance for more than 30 years with no claims before her policy was not renewed due to fire risks.
According to Stewart, her insurance premium has tripled under the FAIR plan. Stewart said she’s had to get an additional wraparound policy to supplement the FAIR insurance, but her policy was canceled three times by different insurers due to fire risk and is now considering going without coverage since she owns her home.
“When you’re retired, it’s just terrible,” Stewart said. “When it’s all hitting your wallet in this magnitude it’s huge. I could go with not having insurance but that’s when things happen.”
Stewart said with insurers dropping her and no other options, the FAIR plan doesn’t seem like a temporary option.
Last week, as Lara announced the changes, District 3 Supervisor Dan Miller met with FAIR Plan President Anneliese Jivan as part of the rural county representatives of California to discuss the homeowners insurance crisis.
“I think he’s trying to come in the back door and ride the coattails of the FAIR plan,” Miller said of Lara’s press release.
According to Miller, the response to the growing insurance issue has been in the works in for some time, with insurers and insurance agents coming together with homeowners in its development.
Miller said the improvements, though minor, are a step in the right direction made possible by the growth in FAIR policy holdership, with the wider customer base allowing for increased coverage.
“The geographic area was so small that it wasn’t possible,” Miller said. “They’re using Cal Fire’s state response area enabling an offset of costs with the increased numbers.”
While Stewart said she’s encouraged with the progress coming in the coming months, she is not happy yet and would like to see more individualized assessments of fire risk areas.
“I’m sure next year it’s just going to be more expensive,” Stewart said. “I understand they’re in the business of making money, but they should have planned that out earlier.”
To contact Staff Writer John Orona, email firstname.lastname@example.org or call 530-477-4229.
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