California FAIR Plan

that would have given me $300,000.

So of the 800,000, so the insurance company, the California Fair Plan, which I think they're doing the best they can, it was always designed to be an emergency insurance company.

They cover on my policy, $800,000.

Ken, I wish I could build a house for $800,000 in California.

One board's policy was with State Farm.

The others was with the California Fair Plan.

The fire did not know the difference.

The declarations pages did episode seven, same street, two policies.

And of course, there's that Fair Plan rate hike.

The California Fair Plan will be increasing its rates by an average of 29%, and that affects more than 675,000 people, the highest rate bump in recent history.

In high-risk areas, some will see their wildfire premiums double.

Now, if you look at my numbers, $1,200 a year or $100 a month back in 2009 and over $5,000 this year.

In the half-decade leading up to 2026, the number of people on California's Fair Access to Insurance Requirements Plan, the last resort insurance for people who can't get any other, more than doubled to almost 700,000 policies.

In the past four quarters, Fair Plan growth has slowed.

But all that makes the insurance commissioner race even more fraught.

I've had a lot of people in the industry say to me they feel very good about these regulatory changes, says Carolyn Kowski, founder and executive director of Insurance for Good, a nonprofit insurance think tank.

The plans tend not to cover full reconstruction, for one thing.

But she's raising an interesting question.

What problem would government insurance actually aspire to fix? If you want to address the problem that some people don't have access to affordable insurance, well, there are already programs to deal with that, like the FAIR plan in California or Citizens Property Insurance Corp.

in Florida.

That is not a recipe for success either.

Nobody that's on the fair plan or another state run plan in another state is having a good experience with that right now.

So the consumer is unhappy and the state's taking on unacceptable risk.

So it's really interesting because this is playing out in the sleepy insurance commissioner's race, which not a lot of people like paying attention to.

But we're seeing that unfolding in California as well right now.

Yeah, that's fascinating.

The Fair Plan was struggling after the Southern California fires.

They needed a $1 or $2 billion influx of funds to stay solvent.

and make sure that the industry is actually really rewarding it in a much more substantive way.

Hundreds of thousands of residents have been dropped from their coverage, put on the fair plan.

I mean, in the last, what, four years? That's the state's insurer of last resort.

It also remains unaffordable for many policyholders.

And as you mentioned, rates have rose.

I mean, I think nearly on average 30 percent starting this month.

So How would you alleviate that pressure on the fair plan? Because there are more communities that are being deemed high wildfire risk, even some areas in Sacramento County.

So more policyholders will be joining this plan.

Premiums have gone up dramatically as well.

A lot of folks have had to go into the fair plan, right? Can you just remind us what that is?

Yeah.

So the fair plan is the state's insurer of last resort.

It is mandated by the state and overseen by the state, but it is not a state program.

It is run by private insurance companies.

I mean, it's not cheaper.

Yeah.

They jack up your rates, and they say, "Fire, fire, fire." And everyone accepts it, but also they have no choice, right? They, in order to keep their mortgage, their, um, tenancy, they have to have insurance.

Then they cancel coverage on all the homes that they think are sick or having pre-existing conditions, and they dump them onto something called the fair plan, which they run.

And then finally, they fight your claims every step of the way, deny, delay, and underpay.

And this is, this is the reason why.

Then they cancel coverage on all the homes and patients they think are sick, which is the whole point of insurance is to cover them.

And in California, they dump them into what...

Actually, he's talking about a catastrophic risk pool called the FAIR Plan.

Okay.