California’s FAIR Plan accused of wrongly denying wildfire claims

A.D. After the CZU Lightning Complex fires in the Santa Cruz Mountains in 2020, Sarah Maple’s house was one of the few standing in the Boulder Creek neighborhood. But when she returned to her old three-bedroom red wood, Mapel filled her with smoke and destroyed many of her possessions.

“After the evacuation order was issued, I returned home and only because of the smoke inside,” Maple said. “You can see the dust in the air, and everything is covered in ashes and shadows. It had a horrible smell that made you feel nauseous.

Mapel said her policy would not be covered because there was no “physical change” in her home when she tried to apply for insurance through her insurance provider – California Fair Plan. She said the total cost of the damage was more than $ 200,000.

“They sent me a check for $ 1,100 to buy some HEPA filters and told me to make my home swiffer,” Maple said.

Now, policy makers, consumer advocates and public officials are accusing California of “last resort insurance” of violating state law and failing to provide adequate coverage to homeowners in the state.

On Wednesday, the California Department of Insurance held a public “investigation” hearing in Auckland to gather comments on the plan and “explore solutions” on how to improve the California FAIR plan. The program provides coverage for homeowners and business owners who cannot afford traditional policies because they are in high-risk areas. The court heard two reports last month expressing concern.

“I have heard from business owners and homeowners that they should buy FAIR planning policies in areas affected by wildfires, but if they cannot get a FAIR plan,” said insurance commissioner Ricardo Lara at the meeting.

The plan is a government-sponsored insurance pool, but it is funded and managed by individual private insurers. The climate crisis has been exacerbated in recent years by a series of catastrophic wildfires, with traditional insurers cutting off coverage in the state and the number of homeowners forced to buy FAIR Plan police doubled between 2018 and 2022 with 248,000 policy owners. Department of Insurance.

As the program grew, the department stepped up its review of the equity plan and introduced some new coverage regulations.

In a report released last month, the state said the program had illegally banned or reduced coverage for smoke damage, failed to investigate claims in depth, and misled homeowners with details of their policies and other charges.

The other report lists laundry tips, raising issues of transparency and accountability, including improving the handling of claims, hiring more staff, and resolving financial issues – including a $ 332 million deficit since the beginning of last year.

At Wednesday’s hearing, government officials, advocates, insurance brokers and policy makers reiterated many similar problems and called on the department to find ways to lower insurance premiums.

“Families around the state are struggling with the cost of housing,” said Wendy Thomas, El Dorado County Superintendent, who was hit by Caldor Fire last year. “And those with a steady income are finding it impossible to get enough insurance. The alternative is to insure your property and pray that you never use it.”

During the hearing, justice plan officials declined to discuss “special policy or claims or concerns”, citing legal action by some policy makers. Instead, they focused on warnings about the consequences of forcing the fair plan to significantly expand coverage or lower prices.

“California’s fair plan must have the right value to avoid indirect taxes for all consumers,” said Victoria Rice, president of the FAIR Plan.

Consumer Advocates’ Fair Plan continues to deny claims of smoke, although the Department of Insurance has written a letter to then-Fair Justice President Anelise Givan in January 2021 asking for a smoke cover.

“The fact that the agency does not protect people and does not contain these items is an unwarranted betrayal that needs to be corrected by the commissioner immediately,” said Harvey Roszenfield, founder of the Wachdog Consumer Advocacy Group.

Insurance department officials said they continue to work with the program to change the policy. According to a statement from the agency, 20 private insurers canceled an illegal smoke policy in 2018 and returned $ 166 million to consumers last year.

Maple, owner of Boulder Creek, eventually sold her house for months and could not return the money. She now rents out her friend’s apartment in San Francisco.

“The last time I spent at home was full of worries and anxieties – I felt I had to sell myself and move on,” said Mapel, who sued FAIR. “I am one of many, and it makes a difference. At least I hope I can do better for other people.

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