[Archive.is] The spiraling cost to rebuild could overwhelm the California Fair Plan, the decades-old, government-created insurance safety net
A little-noticed rule change last year by California’s insurance regulator will likely shift a large chunk of the cost of the Los Angeles wildfires to homeowners across the state.
Pushed by insurers, the change puts California homeowners on the hook to pay directly toward the cost of rebuilding from very large disasters through even fatter insurance bills—whether they were exposed to the L.A. fire or not.
“That would be a huge wake up call for Californians because they have no idea that the rules have changed,” said Dave Jones, a former California insurance commissioner.
The new policy affects the backstop for California’s Fair Plan, the state’s insurer of last resort, which sells fire-damage policies to homeowners who can’t get coverage elsewhere.
The worry is that the Fair Plan lacks the resources to pay for the quickly escalating cost of the fires, which have destroyed tens of thousands of structures.
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