California consumer group sues to block insurers from adding surcharge following LA fires

Source: AP

Updated 5:08 PM EDT, April 15, 2025


SACRAMENTO, Calif. (AP) — A consumer advocacy group filed a lawsuit this week to block insurers from charging California customers for $500 million in costs associated with the deadly Los Angeles fires.

California’s insurance commission in February ordered insurers doing business in California to provide $1 billion to the FAIR Plan, the state’s insurer of last resort, to help it pay out claims related to the LA wildfires. The order allows insurers to recoup half the cost from its policyholders in the form of a one-time fee. The commissioner must approve the costs.

The lawsuit, filed by Consumer Watchdog in Los Angeles, alleges Insurance Commissioner Ricardo Lara overstepped his authority and violated state laws for allowing for such cost shifting without going through the proper process. Such regulations have never been authorized in California and should have been vetted and approved by the Legislature or other oversight agencies before enforcement, Consumer Watchdog argued. The suit is asking the court to block Lara from approving the requests. There were at least three pending applications to implement a surcharge as of Tuesday, according to Consumer Watchdog.

“We look forward to defending the rights and pocketbooks of Californians and stopping this socialization of FAIR Plan losses at the public’s expense, while the FAIR Plan’s profits will wholly remain with the insurance companies,” Consumer Watchdog staff attorney Ryan Mellino said in a statement.

Read more: https://apnews.com/article/california-wildfires-insurance-fair-plan-8a70b82467f76c16b5c9496fa67ee96c