California’s insurer for people without private coverage needs $1 billion more for LA fires claims

California’s plan that provides insurance to homeowners who can’t get private coverage needs $1 billion more to pay out claims related to the Los Angeles wildfires, the state Insurance Department said Tuesday.

California’s plan that provides insurance to homeowners who can’t get private coverage needs $1 billion more to pay out claims related to the Los Angeles wildfires, the state Insurance Department said Tuesday. The FAIR Plan is an insurance pool that all the major private insurers pay into, and the plan then issues policies to people who can’t get private insurance because their properties are deemed too risky to insure. The plan, with high premiums and basic coverage, is designed as a temporary option until homeowners can find permanent coverage, but more Californians are relying on it than ever. There were more than 452,000 policies on the Fair Plan in 2024, more than double the number in 2020. The plan says it’s expecting a loss of roughly $4 billion from the Eaton and Palisades Fires, which sparked January 7, destroyed nearly 17,000 structures and killed at least 29 people. Roughly 4,700 claims have been filed as of this week, and the plan has already paid out more than $914 million. Under a FAIR Plan request approved by the state Tuesday, all insurers doing business in California will have to bear half the cost and can pass on the rest to all policyholders in the form of a one-time fee. Insurers can collect that cost in the next two years. The state Insurance Department must approve those costs. State officials didn’t immediately have details on how large the fee would be. In approving the request, the state allowed the plan to send out notices and collect funding from marketplace insurers within 30 days. It’s the first time the Fair Plan has sought approval for additional money in more than 30 years, the department said.