Retired nurse Nancy Reed has been through the ringer trying to get insurance for her home next to a San Diego County nature preserve.<\/p>\n
First, she was dropped by her longtime carrier and forced onto the state\u2019s insurer of last resort, the California FAIR Plan, which offers basic fire policies \u2014 something thousands of residents have experienced at the hands of fire-leery insurance companies.<\/p>\n
But what she didn\u2019t expect was how hard it would be to find the extra coverage she needed to augment her FAIR Plan policy, which doesn\u2019t cover common perils such as water damage or liability if someone is injured on a property. <\/p>\n
She secured the \u201cdifference-in-conditions\u201d policies from two insurers, only to be dropped by both before finally finding another for her Escondido home.<\/p>\n
\u201cI\u2019ve lived in this house for 25 years, and I went from a very fair price to \u2018we\u2019re not insuring you anymore\u2019 \u2014 and I\u2019ve had three different difference-in-conditions policies,\u201d said Reed, 71, who is paying about $2,000 for 12 months of the extra coverage. \u201cAnd I\u2019m holding my breath to see if I will be renewed next year.\u201d<\/p>\n
Now, a Department of Insurance regulation<\/a> that would have required the FAIR plan to offer that additional coverage has been blocked by a state appeals court \u2014 leaving the plan\u2019s customers to find that insurance in a market widely considered dysfunctional.<\/p>\n The court ruled<\/a> earlier this month that the order would have forced the plan to offer liability insurance, which was not the intent of the Legislature when it established the plan in 1968 to offer essential insurance for those who couldn\u2019t get it.<\/p>\n \u201cWe appreciate that the court confirmed the California FAIR Plan is designed and intended to operate as California\u2019s insurer of last resort, providing basic property coverage when it cannot be obtained in the voluntary market,\u201d said spokesperson Hilary McLean. <\/p>\n Insurance Commissioner Ricardo Lara said he is \u201clooking at all available options\u201d following the decision. \u201cI\u2019ve been fighting so people can have access to all of the coverage the FAIR Plan is required by law to provide,\u201d he said in a statement. <\/p>\n Lara has faced criticism<\/a> from consumer advocates who\u2019ve called for his resignation over his response to the state\u2019s ongoing property insurance crisis.<\/p>\n A FAIR Plan policy covers fires, lightning, smoke damage and internal explosions, as well as vandalism and some other hazards at an additional cost. But in addition to water damage and liability protection, it doesn\u2019t cover such common perils as theft and the damage caused by trees falling on a house.<\/p>\n The demand for the additional coverage \u2014 commonly referred to as a \u201cwrap-around\u201d policy \u2014 has become even greater than in 2021 when Lara issued the order overturned on appeal.<\/p>\n The FAIR Plan at the time had about 160,000 active dwelling policies following a series of catastrophic wildfires, including the 2018 fire that nearly destroyed the mountain town of Paradise. By September, that number had grown to 646,000.<\/a><\/p>\n The insurance department lists less than two dozen companies<\/a> that offer wrap-around policies, including major California home insurers such as Mercury and Farmers and a a number of smaller carriers.<\/p>\n But broker Dina Smith said that to find the coverage for her home insurance clients she needs to place about 90% of them with carriers not regulated by the state \u2014 with the combined coverage typically costing at least twice as much as a regular policy.<\/p>\n \u201cThe [market] is very limited,\u201d said Smith, a managing director at Gallagher<\/a>.<\/p>\n