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The Labor Code provides in essence that persons employed by the owner or occupant of a residential dwelling are generally not considered employees for purposes of workers’ compensation and therefore not entitled to benefits if they work less than 52 hours, or who earned less than $100 in wages for an employer, during the period of 90-calendar days prior to the date of the alleged injury.

Those who exceed those limits are employees of the owner or occupant, and a number of cases in the worker’s compensation literature illustrate examples, such as in Fichera and Allstate Ins. Co. v. W.C.A.B. (May) (1981) 46 Cal.Comp.Cases 26 (Writ Denied), the Board held that an injured house and animal sitter was included within the definition of an employee even though she had only worked 38 hours before sustaining an injury where the Board found that the contract of employment provided for more than 52 hours of work per week.

To assist homeowners in securing coverage for workers’ compensation liability, the legislature passed Insurance Code section 11590 in 1977 which provided that no policy providing comprehensive personal liability insurance may be issued or renewed in this state on or after January 1, 1977, unless it contains a provision for coverage against liability for the payment of workers compensation, as defined in Section 3207 of the Labor Code, to any person defined as an employee by subdivision (d) of Section 3351 of the Labor Code.

Any such policy in effect on or after January 1, 1977, whether or not actually containing such provisions, shall be construed as if such provisions were embodied therein. However, such coverage shall not apply if any other existing, valid and collectible, workers’ compensation insurance for such liability is applicable to the injury or death of such employee.

Homeowners’ insurance policies in California are the method by which owners and occupants of residential properties secure coverage for industrial injuries. But not all homeowners are able to purchase homeowner policies if they live in areas where they are near the risk of forest fires or other catastrophes such as flooding. In response to insurers’ reluctance to write basic property insurance for homeowners who live in high risk or otherwise uninsurable areas, in 1968, the California Legislature enacted the “Basic Property Insurance Inspection and Placement Plan.”

The 1968 law provides for the ‘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 by the establishment of a FAIR Plan, an industry placement facility and a joint reinsurance association.The FAIR plan provided for coverage of the property only, and did not provide for general liability or workers compensation coverage for the homeowner.

Since 1968 the difficulty for homeowners in California to obtain homeowner insurance has substantially increased. Allstate, Farmers, and USAA, have either completely stopped writing new policies or significantly limited their activity in California. Additionally, four smaller insurers: Merastar, Unitrin Auto and Home, and Unitrin Direct Property and Casualty, have announced they will not renew existing policies in California starting in 2024.

On November 14, 2019, the Insurance Commissioner issued Order No. 2019-2, which required the FAIR Plan to submit a new revised plan of operation to effectuate various business operational changes to the FAIR Plan, including requiring the FAIR Plan to sell HO-3 policies in California. An HO-3 policy is a homeowner’s insurance policy and refers to the name of the standardized insurance form issued by the Insurance Services Office, Inc.

On December 13, 2019, FAIR Plan filed a petition for writ of mandate in California Fair Plan Association v. Lara, case number 19STCP05434, challenging Order No. 2019-2. On December 19, 2019, the Commissioner issued Order No. 2019-3, in which the Commissioner promulgated his own revised plan of operation to be followed by FAIR Plan to effectuate the aforementioned business operational changes.On August 19, 2021, the Court entered its judgment granting in part and denying in part the writ petition, directing the Commissioner to set aside those parts of Order Nos. 2019-2 and 2019-3 that require the FAIR Plan to offer a comprehensive HO-3 Policy.

In response, on September 17, 2021, the Commissioner issued Order No. 2021-2, which requires FAIR Plan to offer a “Homeowners’ Policy” that “insures against, at a minimum, the following perils to the insured property not currently covered under the FAIR Plan’s dwelling fire policy: accidental discharge or overflow of water or steam; premises liability; incidental workers’ compensation; theft; falling objects; weight of ice, snow, or sleet; freezing; and loss of use, including coverage for additional living expenses and fair rental value.”

On October 14, 2021, the Fair Plan Association filed another petition seeking to nullify Order No. 2021-2. On November 27, 2023 the Superior Court of the County of Los Angeles denied the Petition for Writ of Mandate in case 21STCV38060. Thus, currently Order No. 2021-2 (as amended) remains in effect. Homeowners who are unable to obtain homeowners insurance will at least be offered a policy with workers compensation and general liability insurance under the FAIR plan, although the coverage is not the equivalent of an HO-3 policy.