Commissioner Ricardo Lara has ordered what will be the first coverage limit increase in 25 years.
California Insurance Commissioner Ricardo Lara has ordered the first agricultural insurance limit increase in fire-prone areas in a quarter of a century.
Lara determined that the order was necessary in order to meet the current wildfire risk and rising cost of repairs.
The increase in the agricultural insurance limits is approximately 90 percent higher than the limits in the California Fair Access to Insurance Requirements (FAIR) plan, which is the last-resort program for property owners unable to obtain affordable commercial coverage elsewhere.
“With a tighter insurance market due to wildfire risks, many farmers and vintners need more coverage than they can currently get,” said Lara. “I am taking aggressive action to protect our farmers, vintners, and other businesses immediately while local government, state government, insurers, and businesses all work together to reduce the wildfire risk and increase a competitive insurance market.”
Lara has the authority to revoke his FAIR approval for agricultural insurance at any time.
The California commissioner has determined that limits must be increased to meet coverage needs for rural wildfire risks. That said, if it is determined that this change to the program is not adequately stabilizing the wildfire coverage market, he has the authority to revoke that approval at any point. In this circumstance, Lara chose to require the FAIR plan to almost double its previous policy limit for commercial properties in rural areas.
This represents the first time the limits have been changed in about 25 years. Moreover, Lara also ordered that the limits be adjusted for inflation every two years from now onward.
The FAIR plan changes are required to be enacted within 90 days in order to be compliant with the insurance commissioner’s order. This will be particularly important for safeguarding the state’s wineries, which are at a particular risk from wildfire losses this year, if not from the blazes themselves, from the smoke. The FAIR plan requires California insurers to offer basic commercial property agricultural insurance coverage no matter the presence of wildfire risk within its area.