The California insurance commissioner's order directing changes to the state's insurer of last resort has hit a legal roadblock.

In a decision issued Feb. 18, Los Angeles Superior Court Judge Mary Strobel imposed a preliminary injunction against Insurance Commissioner Ricardo Lara, saying he cannot compel the California FAIR Plan Association to issue a comprehensive homeowners insurance, or HO-3, policy. Lara's order, issued Nov. 14, 2019, directed the FAIR Plan to offer HO-3 coverage by June 1, 2020, in addition to its current dwelling fire-only coverage.

The ruling did uphold the two other parts of the order: raising the combined dwelling coverage limit to $3 million from $1.5 million, and instituting a no-fee monthly payment plan and the ability to make payments by credit card or electronic funds transfer without any fees.

The FAIR Plan, established in 1968, is a pool of all insurers authorized to sell basic property insurance in the Golden State. The plan provides fire insurance only as a last resort for homeowners who have either lost or are unable to find insurance in the voluntary market.

Strobel said in her decision that the injunction was warranted because the FAIR Plan has "a reasonable probability" of prevailing on its contention that Lara exceeded his authority by ordering the addition of HO-3 policies. She added that the preliminary injunction "preserves the status quo pending a decision on the merits" of the case and is "not a determination on the merits."

The FAIR Plan on Dec. 13, 2019, filed a petition for a writ of mandate asking the court to rule that Lara must withdraw his order. The FAIR Plan said the order violated state law and would force the insurer out of compliance with its statutory mandate "to provide basic property insurance, serve as a stabilizing force in the insurance marketplace, and to maintain actuarially sound rates."

The previous week, Anneliese Jivan, the FAIR Plan president, sent a letter to Lara, asking him to reconsider his order.

In a statement emailed to S&P Global Market Intelligence, the association said the ruling "reaffirms the FAIR Plan's critical role as a reliable safety net for Californians to protect against loss from fire, especially for those who live in the driest, most fire-threatened areas of the state."

"The preliminary injunction in no way delays our efforts to advance those elements of the department's order that we had already been working to implement, including increasing coverage limits and allowing credit card payments," Jivan said in a prepared statement. "We remain committed to working with state leaders, industry professionals and homeowners to ensure all Californians have access to the insurance coverage they need."

Michael Soller, the department's deputy commissioner for Northern California, in an emailed statement also said the FAIR Plan is a safety net for consumers and "needs to modernize to meet the increasing challenge of wildfire risk."

Soller added that the department will continue to work with the FAIR Plan to implement Lara's order and that they "both share the same goals: to have an effective backstop for consumers who cannot otherwise obtain insurance."