U.S. California's insurer of last resort runs out of money to pay LA fire claims

NEW YORK, Feb. 12 (Xinhua) -- California's home insurance plan of last resort has run out of money to pay the wave of claims stemming from the Los Angeles fires and will receive a bailout of 1 billion U.S. dollars, state regulators has announced.

"The decision to grant the plan's request for a cash infusion comes in the aftermath of two of the most destructive fires in the state's history, which destroyed roughly 6,800 structures in the Pacific Palisades neighborhood and about 9,400 in the suburb of Altadena last month," reported The Washington Post on Tuesday.

Since then, the FAIR plan, or Fair Access to Insurance Requirements plan -- a state-mandated property insurance plan, has been inundated with claims for damage by homeowners who lost everything, and who had not been able to get coverage on the private market. To date, the plan has paid out 914 million dollars to policyholders, a figure that is expected to grow.

To continue to pay claims, the plan asked California Insurance Commissioner Ricardo Lara to approve a 1 billion dollars assessment of its membership, which is made up of the insurance companies that do business in the state. Insurers, in turn, are allowed to pass on a portion of that cost to their policyholders, potentially raising the cost of home insurance across the state.