In a consumer alert video, Consumer Watchdog warns that a low-benefit, high-cost policy similar to the FAIR Plan is the best homeowners can expect from Insurance Commissioner Ricardo Lara’s deal with the insurance industry.
“California Insurance Commissioner Ricardo Lara cut a deal with the insurance industry, one that he says will get them selling more home insurance in California. But internal documents Consumer Watchdog obtained under the Public Records Act show that the deal is a bait and switch on consumers that won’t get a single new homeowner covered,” Consumer Watchdog executive director Carmen Balber says in the video.
In September, Commissioner Lara announced a plan offering insurance companies deregulation in exchange for a “commitment” to start selling in high-risk areas of California again.
However, documents uncovered by Consumer Watchdog reveal that insurers could fulfill their commitment by offering the same high-cost, limited-benefit coverage that homeowners currently access through the FAIR Plan.
These documents contain the text of the plan Lara negotiated in August, which formed the basis for his September agreement with the insurance industry.
Commissioner Lara testified before an Assembly Insurance Committee oversight hearing but did not disclose the type of policy insurance companies would be allowed to offer.
The consumer alert video highlights the shortcomings of the FAIR Plan policies, explaining that such policies cover minimal risks, requiring homeowners to purchase additional coverage to fill in gaps.
“FAIR Plan policies cover so little that homeowners have to buy a second insurance policy to fill in the gaps,” the video says.
It further explains that while both standard home insurance and the FAIR Plan cover fire, smoke, and lightning damage, additional coverages such as windstorm, hail, and vandalism require extra payment under the FAIR Plan.
In addition, the FAIR Plan does not offer coverage for theft, falling trees, the weight of snow and ice, non-flood water damage, glass breakage, liability, and other common protections.
The video concludes by stating that Commissioner Lara is giving the insurance industry everything it wants in return for a “false promise” to start selling in California again.
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