California Court of Appeal, California Fair Plan Association v. Lara, as Insurance Commissioner, Docket No. B336043

Basic Property Insurance Inspection and Placement Plan

 

California FAIR Plan Association (CFPA)

 

California Law

 

 

 

APPEAL from a judgment of the Superior Court, Los Angeles County, Curtis A. Kin, Judge. Reversed with directions.

 

In 1968, our Legislature enacted the “Basic Property Insurance Inspection and Placement Plan” (the Basic Property Insurance Law, Ins. Code, §§10090–10100.2). To meet its defined goals, the law established a joint reinsurance association known as the California FAIR Plan Association (CFPA). (§10090, subd. (d).) CFPA is the insurer of last resort in this state, statutorily mandated to offer basic property insurance to any “persons having an interest in real or tangible personal property who, after diligent effort ..., are unable to procure such insurance through normal channels from an admitted insurer.” (§ 10094, subd. (a); St. Cyr v. California FAIR Plan Assn. (2014) 223 Cal.App.4th 786, 793 (St. Cyr).) This appeal concerns the statutory definition of “basic property insurance.” The law defines the term as follows: “‘Basic property insurance’ means insurance against direct loss to real or tangible personal property at a fixed location in those geographic or urban areas, as designated by the Insurance Commissioner of this state, from perils insured under the standard fire policy and extended coverage endorsement, from vandalism and malicious mischief, and includes other insurance coverages as may be added with respect to that property by the industry placement facility with the approval of the commissioner or by the commissioner, but shall not include insurance on automobile risks, commercial agricultural commodities or livestock, or equipment used to cultivate or transport agricultural commodities or livestock.” (§ 10091, subd. (c)(1), italics added. 

 

 

(FAIR is an acronym that refers to “fair access to insurance requirements.” (§ 10090, subd. (d).) As we will discuss, the Basic Property Insurance Law’s purposes are (1) to assure stability in the property insurance market, (2) to assure the availability of basic property insurance as defined in the law, (3) to encourage the maximum use of the normal insurance market in obtaining basic property insurance, and (4) to provide for the equitable distribution among admitted insurers of the responsibility for insuring qualified property for which basic property insurance cannot be obtained through the normal insurance market. (§10090.) Fn. 2).

 

(As we will discuss, section 10091, subdivision (c)(2) refines this definition to specify that, “for the purposes of earthquake coverage that is provided as a component of basic property insurance, the association shall sell only the policy described in Section 10089.”) Fn. 3).

 

 

Plaintiff and appellant CFPA petitioned the trial court for a writ of mandate directing the Commissioner to withdraw, annul, or vacate a 2021 order directing CFPA to submit a plan to offer and sell a “‘Homeowners’ Policy’” that provides coverage for, among other things, “premises liability” and “incidental workers’ compensation” (Order No. 2021-2). The trial court found the “other insurance coverages” phrase ambiguous and, in deference to the interpretation advanced by the Department of Insurance (DOI), construed the statute to authorize the addition of liability insurance coverages, so long as those coverages “have some connection to the property.”  We reach a different conclusion. While we agree the statutory definition is susceptible of DOI’s interpretation, our review of the statutory scheme and the historical context of the law’s passage compel us to conclude that the Legislature’s intent in enacting the Basic Property Insurance Law was to ensure that first-party property insurance—not liability coverage—would be available to property owners in this state. We therefore reverse the judgment and direct the trial court to grant the petition for writ of mandate.

 

(…)

 

 

(California Court of Appeal, Dec. 5, 2025, California Fair Plan Association v. Lara, as Insurance Commissioner, Docket No. B336043, Certified for Publication)