The California Fair Plan is supposed to be the fallback when someone can’t get insurance anywhere else, but an Oakland attorney and the state's Department of Insurance found policyholders are falling through the cracks by the hundreds of thousands.
“If you have a California Fair Plan policy, you must understand it's a restricted policy,” said Mark Friedlander, a spokesman for the Insurance Information Institute.
It’s criminally restrictive, according to the Department of Insurance and the attorney who filed a class action lawsuit, Dylan Schaffer, who is with the Kerley Schaffer law firm.
Insurance policy reporting
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“It is Insurance Code 2083, and it says that every time California Fair Plain sells this policy, it commits a misdemeanor,” Schaffer said. “That means that California Fair Plan committed 350,000 misdemeanors last year …. They're doing it every single day. Every time I get a call from a client who's purchased a fair plain policy, that's a crime.”
In 2022, the Department of Insurance reported the California Fair Plan for doing this, but Schaffer said it’s still happening.
“I have deposed senior executives at Fair Plan, and they have more or less told me the reason that they do it is because it saves them a very, very large amount of money,” Schaffer said.
Friedlander advises policyholders to seek free help from an insurance agent.
“It's really important to work with a licensed insurance agent that understands the market and can help you make sure you have adequate types and levels of coverage so that you do not have insurance gaps," Friedlander said.
Schaffer said he filed the class action lawsuit to hold the California Fair Plan accountable. When NBC 7 reached out to the insurer, representatives said they don’t comment on pending litigation.
The Department of Insurance also declined to comment on the lawsuit.
