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Consumer Watchdog Sues to Block Homeowner Surcharges for Wildfire Losses

The lawsuit challenges California Insurance Commissioner Ricardo Lara's approval of a cost-recovery mechanism tied to the FAIR Plan, alleging statutory violations and lack of public input.

FILE - An aerial view shows the devastation from the Palisades Fire on beachfront homes, Jan. 15, 2025 in Malibu, Calif. (AP Photo/Jae C. Hong, File)
Thousands of structures sit in ruins in Altadena, CA, on Sunday, Jan. 19, 2025. The Eaton Fire, fueled by intense Santa Ana Winds, ripped through beginning on the evening of Jan. 7. Fires across Los Angeles County have left at east 27 dead and over 180,000 people under evacuation orders. Over 12,000 structures, many of them homes and businesses, burned in the Palisades and Eaton Fires. (Photo by Jeff Gritchen, Orange County Register/SCNG)
An aerial photo shows the charred homes of Louise Hamlin, center left, and Chris Wilson, center right, after the Eaton Fire in Altadena, Calif., Thursday, Jan. 30, 2025. (AP Photo/Jae C. Hong)
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Overview

  • Consumer Watchdog has filed a lawsuit in Los Angeles Superior Court to block potential surcharges on homeowners' insurance policies under the FAIR Plan.
  • The legal action targets a $1 billion FAIR Plan assessment approved by Commissioner Ricardo Lara, which could pass $500 million in costs to policyholders statewide.
  • The group argues that the surcharge mechanism violates the 1968 statute that created the FAIR Plan and was implemented without sufficient public input or oversight.
  • The FAIR Plan has seen rapid growth, now covering over 555,000 policies, as private insurers retreat from high-risk wildfire zones due to escalating claims.
  • The lawsuit highlights broader concerns over California's insurance market, as climate-driven wildfires strain financial sustainability and regulatory strategies.