FAIR Plan in regulatory and court crosshairs

August 13, 2025 4:00 PM

California's State Capitol in Sacramento — Flags fly in front of the California State Capitol building in Sacramento.

In California, action on the state's homeowners insurance crisis has recently centered around the FAIR Plan. The plan is the state's longstanding insurance of last resort for homeowners who cannot get coverage from private insurers. The Los Angeles wildfires in January exacerbated the already stressed finances of the FAIR Plan.

The summer has seen the state's insurance commissioner, Ricardo Lara, take some actions to get the FAIR Plan to be more responsive to survivors of the wildfires, as well as to stabilize its finances. On the other hand, consumer advocates have criticized Lara's oversight of the plan, including bringing a case in Los Angeles Superior Court about continued funding of the plan.

California regulator will broaden insurance of last resort

June 26

Commissioner Lara promised to release information on the FAIR Plan's total exposures, policy counts and finances by July 1.

The commissioner also extended FAIR Plan coverage to commercial properties temporarily to bring in more premiums to support its finances.

Regulator starts task force to address denials of LA fire smoke claims

July 2

Los Angeles Superior Court had ruled against the FAIR Plan for illegal denial of smoke damage claims following the January wildfires. (Separately, the insurance commissioner is probing State Farm for its denials of smoke damage claims).

Following this decision, the commissioner launched a Smoke Claims and Remediation task force to set standards for fair treatment of policyholders exposed to wildfire smoke.

FAIR Plan stats show sharp rises in exposures, number and value of policies

July 14

Commissioner Lara followed up on his June promise by releasing FAIR Plan data that showed sharp increases in total exposure, policy counts, written premiums and new business. This quantified the plan's financial problems, which include $649 billion in exposure, representing a 42% increase over its exposure just nine months earlier.

FAIR Plan funding will go to court

July 23

Consumer Watchdog, the California-based consumer advocacy group which successfully sued the FAIR Plan for denying smoke damage claims, had another suit pending over the plan's right to charge home insurance policyholders a fee to help its finances.

The Los Angeles Superior Court gave the group another win by ruling that its case against the state's department of insurance for allowing the new fee could proceed.

California regulator orders FAIR Plan to justify claim denials

August 1

Commissioner Lara, after releasing data on the FAIR Plan's finances and starting a task force to probe the plan's handling of smoke damage claims, ordered the plan to justify its denials of those claims.

The commissioner also acted on another issue related to wildfires by approving private companies' catastrophe models for use in determining rates. Karen Clark & Company and Verisk have received the approvals.