CA's Richest Communities A Burden For State's Insurer Of Last Resort: Report

Some of California’s wealthiest areas — such as Beverly Hills, Bel-Air, and the vacation communities of Lake Tahoe and Lake Arrowhead — increasingly contribute liability exposure to the Golden State’s insurer of last resort, according to a recent Bloomberg story published by multiple news outlets.

A Bloomberg analysis of the newest available data revealed that nine of over 1,700 zip codes in California account for roughly 7 percent of FAIR Plan liability exposure or $44 billion per last September, a 135 percent spike in monetary exposure for the insurer in those neighborhoods since 2022.

The disproportionate exposure risk of high-income communities has increased costs for all FAIR policyholders, burdening middle-income households, according to Bloomberg, which added a spokesperson for the plan declined to comment.

While the plan must legally accept any homeowner unable to get insurance in the private market, policy payouts are capped at $3 million, the outlet reported, noting climate and energy scholar Michael Wara of Stanford University believes that’s still too much.

“If you can afford to have a house in Tahoe, then you should not be reliant on what is essentially a subsidy from the rest of the state for your homeowner’s insurance,” Wara told Bloomberg.