California home insurance program accused of selling policies with subpar fire coverage

Because of policy changes, a lawsuit claims, thousands of wildfire claims have been improperly denied. But since 2017, the lawsuit claims, the FAIR Plan began limiting coverage after state officials approved a standard policy that, among other provisions, paid for smoke damage only if it was detectable to the unaided eye or nose of an average person rather than requiring laboratory testing. “The illegal policy gives FAIR Plan and its member companies like State Farm and Nationwide license to refuse to properly investigate and pay wildfire smoke damage claims,” Schaffer said. The lawsuit claims that the department wrote a letter to the FAIR Plan in January 2021, saying the amended fire insurance policy was unlawful because it failed to provide “the mandatory minimum coverage required by California law.” The letter also told the FAIR Plan that it had obtained approval for its policy based on “misrepresentations” and “concealment of material facts,” according to the lawsuit. “We’re not asking for any money, we’re just asking the California FAIR Plan to come into the light, to come in where all its member carriers are,” Schaffer said.