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Businesses benefit from increase of FAIR plan insurance

On Behalf of | May 17, 2023 | Insurance Disputes

California businesses need to be adequately prepared for every eventuality. That includes being ready for unexpected occurrences that can damage or outright destroy their operations and property. That could be the land on which their business is located; the items they use as part of their business; natural resources they are cultivating and more.

Wildfires have been a significant concern in recent years, particularly in Northern California. With that, it has grown more difficult to get sufficient insurance coverage. Many insurers have shown reluctance to continue providing coverage due to major payouts. The state has needed to step in. Recently, California’s FAIR Plan benefited businesses that were having trouble getting comprehensive insurance.

Private premiums had risen by as much as four times what they were

Wineries are a major business in the area and they have been among those who were most heavily impacted by the wildfires. In the past six years, the losses surpassed $1 billion. Since the losses were so massive and private insurers were increasing their rates or pulling out of the market entirely, the state’s FAIR plan has picked up the slack.

Recently, it raised the limits for those seeking coverage for their commercial property and businesses. The limits had not been raised for about 20 years. This is important given the heavy losses incurred. The wineries and vineyards had lost more than $600 million from the wildfires. The FAIR increases can benefit them.

Since 2000, claims due to fires rose by six times what they were before. By 2019, it reached $4 billion. The next year, it was over $9 billion. Private insurers tripled or quadrupled the premiums for agricultural businesses that could keep using their coverage. They also had less coverage for the higher prices. Some see the FAIR plan increase in coverage as a short-term strategy until private insurance returns.

Insurance issues require qualified and experienced assistance

The FAIR Plan has certainly helped those worried about another series of wildfires. Businesses are grateful for it, but they are still waiting for private insurers to start offering coverage again and are thinking about its cost.

The objective of insurance coverage for wildfires, natural disasters and other incidents is to make sure the business can get back on its feet. Often, there is a gap between what the policyholder says they have lost and should be repaid and what the insurer is willing to cover.

Inability to get insurance at all is also an issue. For insurance disputes, businesses and individuals should be prepared for every eventuality with help from professionals who specialize in this area.