LOS ANGELES, July 22, 2025 /PRNewswire/ -- A Los Angeles Superior Court judge today finalized a ruling that allows Consumer Watchdog's lawsuit to proceed against Insurance Commissioner Lara and the Department of Insurance's controversial plan permitting insurance companies to impose wildfire-related surcharges on homeowners and businesses—even though those costs are supposed to be shared among insurers—not policyholders—under state law.

The court rejected the Department's attempt to throw out the core of the lawsuit, finding that Consumer Watchdog may proceed with its claim that the pass-through surcharges violate California's FAIR Plan statutes. The FAIR Plan is California's last-resort fire insurance program, and the law requires insurers to share costs equally—not shift them to consumers.

"This is a significant procedural victory that ensures the Commissioner's arrangement, which could shift hundreds of millions of dollars from homeowners to insurers will get the scrutiny it deserves," said William Pletcher, Consumer Watchdog's Director of Litigation. "California consumers should not be forced to subsidize insurance companies when the law makes clear the amounts must be paid by insurers, not policyholders."

Consumer Watchdog filed suit in April after the Department issued a pair of bulletins authorizing insurers to recover FAIR Plan assessments through "temporary supplemental fees" on policyholders—fees that were never authorized by the Legislature and were adopted without the transparency or public input required by law.

The ruling allows Consumer Watchdog to move forward with the part of its lawsuit alleging that these pass-throughs conflict directly with the governing statutes, which require insurers—not policyholders—to cover FAIR Plan costs collectively and proportionally.

"This ruling means the Commissioner's legally unsupported surcharge plan will now be tested in court," said Ryan Mellino, who argued the case for Consumer Watchdog. "The law doesn't allow insurers to profit from the FAIR Plan while pushing their losses onto the people they're supposed to insure. This fight is just beginning—and we intend to prove in court that the Commissioner's plan isn't just unlawful, it's a betrayal of the very consumers he's supposed to protect."

Although the court dismissed two other procedural claims, it held that the remaining claim—challenging the legality of the pass-throughs themselves—raises serious legal questions that must be heard.

This case follows a broader trend of significant regulatory concessions by the Insurance Commissioner to the insurance industry, and it raises critical questions about the rule of law, fairness, and the affordability of home insurance in California.

For background on the lawsuit, visit:
Consumer Watchdog Sues to Stop Hundreds of Millions of Dollars in Unjustified Surcharges from Being Imposed on California Homeowners Consumer Watchdog sued the California Department of Insurance and Commissioner Ricardo Lara to protect California homeowners from hundreds of millions in surcharges that could soon appear on their insurance bills. Ryan Mellino Consumer Watchdog 

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SOURCE Consumer Watchdog