State insurance commissioner doubles FAIR Plan cap for businesses

California Insurance Commissioner Ricardo Lara announced on Tuesday that he will amend the FAIR Plan — the state’s insurer of last resort — to essentially double its coverage limits for commercial businesses.

The action comes as some local businesses, especially North Coast wineries, have seen their premiums rise or have been dropped by carriers as a result of wildfires that have swept through the region in recent years. For example, V Sattui Winery in the Napa Valley is paying four times the price for coverage than it paid a year ago as a result of premium spikes because of the wildfires, according to the North Bay Business Journal.

The FAIR Plan maximum policy limit for its commercial property program is currently $4.5 million and has not been raised since 1997. Lara’s order would increase that fire policy to a cap of $8.4 million, $5.6 million for structure damage and $2.8 million for the loss of personal property.

In addition, the FAIR Plan maximum policy limit for a business owner’s policy program would increase from $3.6 million to $7.2 million.

“While wildfires can happen in many agricultural regions of the state, some parts of our state have borne the brunt of devastating fires starting in 2017,” Lara said in a statement. “With a tighter insurance market due to wildfire risks, many farmers and vintners need more coverage than they can currently get.”

The insurance department also released data that showed the extent of the impact that wildfires have caused in recent years. For instance, the North Coast represents only 8% of the state’s commercial agricultural and farm insurance market, yet the overall incurred losses were 45% of the statewide total dating back to 2017.

The North Coast region also is the most well capitalized of the state’s various wine regions, representing about 47% of all insured structures for the sector. But from 2017 to 2020, the losses for the local wine industry were $370 million, which represented 91% of the industry’s overall insured losses.

State Sen. Bill Dodd, D-Napa, lauded Lara’s actions. “It will improve coverage in significant ways and affords policyholders the kind of protection they deserve,” Dodd said in a statement.

On a related topic, Lara also said Tuesday he has scheduled a public forum on Nov. 10 in his drive to establish home-hardening standards that could protect participating homeowners from being canceled by their carriers because of wildfire danger.

You can reach Staff Writer Bill Swindell at 707-521-5233 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.