SAN DIEGO — San Diego condo owners who had their insurance policies dropped because of wildfire risk are getting some help from the state.
California’s FAIR Plan – described as insurance of last resort – announced this week it will raise its maximum coverage for condo associations from $8.4 million to $20 million.
That comes as good news to Sam Spooner and more than 300 other condo owners in the Morada complex in Rancho Bernardo.
“It's going to fall far short. But it's a better start than what we have right now,” Spooner said. “I think for people who have mortgages, it’s going to be quite helpful to have at least $20 million coverage. And as it is a good platform, a good foundation for our board of directors to work with.”
In January, Farmers Insurance did not renew a $77 million policy on the Morada complex due to wildfire risk.
Morada’s condo association is looking for a replacement policy on the secondary market, but faces a huge rate increase for only $10 million of coverage.
“It could have cost each homeowner like $8,000 of special assessment. And, I think that might still be one of the things that shows up on the options that we get to vote on,” Spooner said.
CBS 8 has been reporting on the California insurance crisis, including more than 1,000 condo owners in San Diego County who recently had their insurance dropped.
Last month, state legislators sent a letter to Insurance Commissioner Ricardo Lara urging him to raise the FAIR Plan maximum to $20 million as a temporary solution.
“Longer, more devastating fire seasons mean that Californians are feeling the impacts of climate change now. Expanding coverage is an important step towards preventing further displacement and protecting homeowners throughout the state,” State Senator Toni Atkins said in a statement.
Victoria Roach, President of the California FAIR Plan Association, emailed CBS 8 the following statement:
"Commissioner Lara’s step forward to address challenges in the current commercial coverage market aligns with the FAIR Plan’s commitment to strengthen consumer choice in the voluntary insurance market and ensure all Californians have access to the basic property coverage they need.
Raising our commercial coverage limit to $20 million per location enables commercial properties, like a homeowners association community or summer camp, to be covered by a FAIR Plan fire insurance policy up to $20 million in total insurable value. We are continuing to work with the California Department of Insurance, the Legislature and other stakeholders to pursue additional solutions that can help restore a healthy insurance market in California.
The FAIR Plan cannot comment on what specific premiums or coverages may look like for property owners who purchase commercial coverage from the FAIR Plan after these higher limits take effect. We also cannot speculate on how this change might impact premiums for existing FAIR Plan policyholders or consumers insured by other carriers across the state.
The new coverage limits will take effect after the FAIR Plan submits a new rule filing for approval by the California Department of Insurance (CDI). The FAIR Plan has 60 days to submit a rule filing to the Department, with the goal of the Department approving these coverage limit increases, meaning coverage could be available in the fourth quarter of 2023."
WATCH RELATED: California senate pushes to stabilize the homeowners insurance market (March 2023).