Sep 2, 2016

Senator Mike McGuire introduces the WildFire Insurance Guarantee Act to inform residents about "insurance of last resort"

While California is seeing unprecedented wildland fires ravage hundreds of communities, thousands of residents are receiving non-renewal notices from their insurance companies. These families in rural California depend on their property insurance coverage and companies have not always been informing residents that there’s an “insurance of last resort” when private insurance agencies will no longer cover them.

Earlier this year, Senator Mike McGuire introduced the Wildland Fire Insurance Guarantee Act – Senate Bill 1302, which would require insurance brokers to inform consumers about the Fair Access to Insurance (FAIR) Plan when they receive a denial or policy cancellation for home insurance. SB 1302 is a bi-partisan, industry supported measure that was approved by both the Senate and Assembly and was sent to the Governor’s desk this week.

“We have heard the difficult stories of residents who want to stay in their homes, but can’t acquire insurance coverage because their carrier has issued a non-renewal notice,” Senator McGuire said. “There is an alternative, but the majority of us have no idea that the State has created a plan which all California insurance companies participate in that helps homeowners in wildland fire prone regions secure property insurance. This bill will require insurance brokers to inform consumers of the FAIR Plan when they receive a non-renewal notice.”

The FAIR Plan was established in the state of California for consumers who are unable to find coverage in the voluntary insurance market. These consumers can turn to the FAIR Plan to insure their home, property and contents, even if they are turned down by traditional homeowners’ insurance companies.

In 2015, California suffered through two destructive wildfires, the Valley and Butte Fires. The Valley Fire, the third worst in state history, in Lake County destroyed over 1,300 homes and hundreds of businesses and agricultural buildings, causing approximately $1.2 billion in property losses in Lake County alone.

During these wildfires, many Californians were facing cancellation or non-renewal of their property insurance policies. Additionally, these same residents faced difficulties in obtaining new insurance coverage while being completely unaware of the Fair Access to Insurance Plan (also known as the FAIR Plan).

This legislation will ensure the public is made aware of the FAIR Plan, by requiring insurance brokers to direct consumers to the FAIR Plan when no other options are available. This bill requires insurance brokers to inform consumers who have received non-renewal notices by either helping them fill out an application for the Fair Plan or by directing them to the Fair Plan website, which has a new tool to identify FAIR Plan registered brokers in California.

SB 1302 was supported by the California Department of Insurance, Consumer Federation of California, Rural County Representatives of California, California Realtors and the insurance industry.

Governor Brown has until September 30 to sign this bill.

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