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The California Fair Access to Insurance Requirements (FAIR) Plan can help you obtain basic property insurance if you’re trying to buy a home in the state and no traditional carrier will offer you a policy. It can also help if your existing carrier decides not to renew your policy.
The FAIR Plan’s dwelling policy covers damage from fire, lightning, smoke, and internal explosions. Optional coverages, such as protection from windstorms and vandalism, are also available for an additional cost.
Here’s what you need to know about the California FAIR plan:
- What is the California FAIR Plan?
- How much does California FAIR Plan insurance cost?
- What does the California FAIR Plan cover?
- How to get California FAIR Plan insurance
- California FAIR Plan FAQs
What is the California FAIR Plan?
The California FAIR Plan is a last-resort fire insurance program for high-risk properties. The main reason you might need a California FAIR Plan policy is if no traditional carrier will offer you a policy. For instance, you may be denied coverage if you live in an area prone to wildfires — such as a rural forest or an area with strong winds and dry vegetation.
The California FAIR Plan covers less than 3% of the state’s homeowners. However, the number of California homeowners who bought a FAIR Plan insurance policy jumped after insurers issued significantly more nonrenewal notices in 2019. Homes covered by FAIR Plan policies increased from 140,447 in 2018 to 241,466 in 2020, according to the latest data available from the California Department of Insurance.
A short-term fire insurance solution
FAIR Plan policies are meant to be temporary — to cover you until you qualify for a plan from a traditional insurance carrier. The FAIR Plan policy term is one year, but you can cancel anytime if you find better coverage.
How much does California FAIR Plan insurance cost?
The cost of a California FAIR Plan policy will depend on the coverage you choose, the insured value of your home, your location, and the deductible you select.
You can expect to spend two to three times as much on premiums for a California FAIR Plan insurance policy as you would for a traditional home insurance policy, according to The Sacramento Bee.
What does the California FAIR Plan cover?
The California FAIR Plan only offers a named perils policy. That means you’re covered only against risks explicitly stated in your policy.
Standard coverage includes the following perils:
You can also purchase extended coverage that covers these additional perils:
If you want protection for vandalism and malicious mischief, you can only purchase that coverage if you have an extended coverage policy — they’re not automatically included.
Difference in conditions (DIC) policy
If you get your fire insurance through the California FAIR Plan, you’ll need to purchase a difference in conditions policy to cover other common perils like theft, water damage, falling objects, and power surges.
A California FAIR Plan dwelling policy combined with a DIC policy provides coverage similar to an HO-3 policy — the standard home insurance policy. While the FAIR Plan doesn’t offer DIC policies, you should be able to find one through the same broker you used to purchase your FAIR Plan policy.
Learn More: What Does Homeowners Insurance Cover?
How to get California FAIR Plan insurance
The process for getting a FAIR Plan policy might be different than you’re used to. You’ll need to follow these steps:
1. Find a broker through the FAIR Plan website
Unlike traditional homeowners insurance, you can’t purchase a FAIR Plan policy by yourself. You must work with an insurance agent or broker. You can find an agent or broker through the California FAIR Plan website.
The agent or broker’s job is to first try to find you a traditional policy. If they can’t, they’ll help you apply for a FAIR Plan policy. You don’t pay anything for their services if you use them to purchase a FAIR Plan policy, and your plan won’t cost more from working with them.
2. Complete the application
Your agent or broker will help you complete your California FAIR Plan application. You’ll need to answer questions about your home’s construction and prior or existing damage, your coverage amount and deductible, and any optional coverages you want to add to your policy.
The application also asks if you’ve ever been denied a FAIR Plan policy and if your property has any existing damage.
3. Schedule the home inspection
It’s not unusual for an insurance carrier to inspect your home if you’re a new customer. The inspector may look at your home’s structure, occupancy, general condition, and other characteristics to assess its risks.
You may not need to be present for an exterior-only inspection, but your insurer might require you to schedule an appointment for an interior inspection.
After the inspection, you may need to mitigate certain risks — for example, cutting a large tree branch hanging over your roof — as a condition of being insured.
4. Pay for the coverage
You can make your FAIR Plan payment online once you have your policy or quotation number.
California FAIR Plan FAQs
Take a look at some of the most frequently asked questions about California FAIR Plan insurance policies.
How do I know if I’m eligible for California FAIR Plan insurance?
California FAIR Plan insurance is available for the following property types when you can’t get fire insurance from a traditional carrier:
- Owner-occupied single-family homes with one to four units
- Owner-occupied condominiums
- Seasonal rentals where you occupy part or all of the property for less than one year
- Long-term rentals where you occupy the property for at least one year
You can also get California FAIR Plan insurance for your personal possessions if you’re a tenant of a single or multifamily home, apartment, or condominium.
What is the maximum amount of California FAIR Plan coverage I can get?
FAIR Plan policies are capped at $3 million for all coverages combined. You also can’t insure your property for more than it would cost to rebuild. For coverage higher than $3 million, contact a surplus lines broker to discuss your options.
When is my first payment due for California FAIR Plan coverage?
You’ll need to pay your premium before the date when you want your coverage to go into effect.
Make sure to avoid any gaps in your coverage, because a fire or disaster can happen anytime.