California Group Files Lawsuit to Prevent Insurers from Imposing Surcharges Following LA Fires
The state insurance commissioner has permitted companies to implement surcharges amounting to $500 million.
The lawsuit, filed on April 14 in Los Angeles Superior Court by Consumer Watchdog, seeks to block the approval of these surcharges by the state Insurance Commissioner, which insurers intend to levy to recover the funds they had to supply to the California FAIR Plan, the state’s insurer of last resort.
California’s FAIR Plan (Fair Access to Insurance Requirements) offers basic coverage to homeowners who cannot secure fire insurance in the private market. Established by state law, the FAIR Plan mandates that all insurers licensed to operate in California contribute financially to its fire insurance pool.
The Epoch Times has reached out to Lara’s office for comment.
Related Stories
Consumer Watchdog aims to protect policyholders both now and in the years to come.
The organization stated, “California homeowners may find themselves responsible for up to $500 million of the $1 billion FAIR Plan assessment approved…following the Palisades and Eaton Canyon wildfires. There are no limitations on the surcharges that can be passed to homeowners in the future, and upcoming wildfires could result in homeowners being responsible for billions more in assessment fees.”
Ryan Mellino, an attorney for the group, commented, “While we acknowledge that the FAIR Plan has significantly expanded recently and agree that action is necessary to address the issue, a unilateral bailout of hundreds of millions is not the solution.”
The American Property Casualty Insurance Association (APCIA), which consists of over 1,200 insurance companies nationwide, described the lawsuit as “a reckless and self-serving stunt.”
APCIA further stated, “Insurers have already paid tens of billions in claims and have contributed over $500 million to ensure the solvency of the FAIR Plan, despite not receiving premiums from FAIR Plan policyholders.”
