California’s FAIR Plan Under Strain After Los Angeles Wildfires
Homeowners affected by the recent Los Angeles wildfires are facing significant challenges with the California FAIR Plan, the state’s insurer of last resort. The plan, which was established to provide insurance coverage in high-risk areas, has been overwhelmed by the surge in claims.
Diane Hvolka, a Pacific Palisades property owner, is among those struggling to receive her insurance payout. Her home was destroyed in the Palisades fire, leaving her with a $550,000 claim that has yet to be settled. “This is so frustrating. I’ve been chasing them ever since,” Hvolka said.
The Times analysis found that in the Palisades and Eaton fire zones, the FAIR Plan’s rolls shot up by 47% last year. The number of homes on the plan in these areas nearly doubled from 14,272 to 28,440 between 2020 and 2024. Four ZIP Codes in the fire-affected zones had more than a third of their households enrolled in the state plan.
Delays and Disputes Over Claims
Many policyholders have complained about delays in payments and other issues with the FAIR Plan. Jaspreet Katrib and her husband, who own a home in Topanga Canyon, received a $48,356 payment from the plan, but it didn’t cover all the damages to their property. The couple had to pay for their own environmental testing, which found contaminants throughout their house.
“It’s been a very emotional experience for us — an emotional roller coaster. It takes days or weeks to get any type of response from the FAIR Plan,” Katrib said.
The FAIR Plan has received about 5,280 claims for damage caused by the Palisades and Eaton fires and has paid more than $2.5 billion to policyholders. However, the plan expects the total cost of the fires to be around $4 billion, prompting it to seek a $1 billion bailout from its member carriers.
Legal Action and Criticism
Ten Palisades and Eaton fire victims have sued the FAIR Plan, State Farm, and nine other large insurers, alleging that they failed to properly investigate and remediate claims for smoke damage. The lawsuit claims that the insurers’ actions have left many homeowners without adequate compensation for their losses.
The FAIR Plan has defended its handling of claims, stating that it “pays all covered claims, including smoke claims, consistent with California law and its policy forms.” However, the ongoing litigation and criticism from policyholders suggest that the plan still has significant challenges to overcome in meeting the needs of those affected by the wildfires.
