California Ups The Limits on FAIR Plan Commercial Buildings Cover

The latest from California where the State is dealing with wildfires, landslips, high crime and other risks when it comes to property insurance;

Insurance Commissioner Ricardo Lara recently announced the approval of the California FAIR Plan Association’s commercial filing to increase commercial property coverage limits. This move is a key element of Commissioner Lara’s ongoing Sustainable Insurance Strategy and continues the implementation of landmark reforms to address California’s property insurance crisis.

Today’s action by Commissioner Lara increases the FAIR Plan’s Division I Commercial Property coverage limits to $20 million per building, with a total $100 million maximum limit per location. The FAIR Plan must make these new coverage limits available to all eligible applicants for both new and renewal policies within 120 days from today’s (Friday 28.03.25) approval date—or sooner—as stipulated in Commissioner Lara’s binding Order No. 2024-2.

“This targeted FAIR Plan expansion helps meet the urgent needs of homeowners associations, affordable housing developers, farmers, builders, and business owners who are being priced out or left without coverage altogether,” said Commissioner Lara. “It is a short-term solution with long-term benefits—providing necessary insurance access while we continue implementing comprehensive reforms to restore a competitive and reliable market in California.”

The FAIR Plan, California’s insurer of last resort operated by a consortium of insurance companies, has grown significantly as traditional insurers retreat from high-risk areas, placing further strain on the market. This growth has created what experts call a “hidden crisis” that threatens long-term solvency and consumer choice.

Commissioner Lara’s action aims to help break the cycle of insurer withdrawal and continued FAIR Plan expansion, which can result in increased costs and fewer options for consumers statewide.

The expansion of limits aligns with the binding legal agreement reached in 2024 between Commissioner Lara and the FAIR Plan, requiring the FAIR Plan to offer this broader commercial coverage while improving its transparency and financial stability.

“Commissioner Lara’s action to expand commercial property coverage is a crucial step for home builders and land developers who have struggled to obtain coverage, especially in high-risk areas for condominiums and affordable housing,” said Dan Dunmoyer, President and CEO of the California Building Industry Association. “These reforms bring us closer to a more predictable and reliable insurance marketplace that will provide consumers with more housing options to own or to rent at a reduced cost.”

“The CALIFORNIA ASSOCIATION OF REALTORS® supports Commissioner Lara’s efforts to expand insurance availability and address growing gaps in coverage,” said C.A.R. President Heather Ozur. “Increasing FAIR Plan coverage options is a necessary part of a broader solution that will help more Californians and transactions succeed in this challenging market.”