The devastating wildfires that tore through Los Angeles County in January are sending financial shockwaves across the state, with all homeowners now bracing for new insurance surcharges. According to the Los Angeles Times, California policyholders can expect to pay an average of $50 more to help cover the costs of the disaster.
Multiple insurers, including State Farm General, the largest in California, have received approval from the Department of Insurance to charge their customers for a portion of a $1-billion assessment they were hit with due to the financial problems of the state’s insurer of last resort.
The decision was made after California’s FAIR Plan Assn. received an estimated $4 billion in residential and commercial claims, which it was unable to fully pay. That left $1 billion in charges for its member carriers.
The FAIR Plan’s members were assessed by their pro-rata share of the state’s insurance market, with State Farm General experiencing the largest assessment at more than $165 million. The vast majority was due to residential losses and it is seeking to recoup $81.5 million from those policyholders…
Homeowners with a standard policy will pay on average a total of $58, varying by the amount of coverage, according to the company’s filing. As is typical, condo charges are less, averaging $25, with renters paying around $4. Commercial customers are being charged a 0.26% fee for one renewal period starting Jan. 1, reflecting the lower fire losses for those policies.
Second-year surcharges could end up being lower for some plans.
Los Angeles-based advocacy group Consumer Watchdog is currently suing the California Insurance Commissioner over surcharges, which it calls illegal.
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