The FAIR Plan, also known as the California Fair Access to Insurance Requirements, is designed to provide fire coverage as a last-resort option for homeowners who are unable to secure insurance through private carriers. This plan primarily serves those residing in high-risk areas, such as fire zones or earthquake fault lines, where obtaining insurance can be challenging.
As a last resort policy, the FAIR plan will provide you with less coverage compared to a standard homeowners insurance policy. This means fewer types of losses and policies will be covered, such as earthquake protection. However, additional coverage can be added to your plan at an additional cost.
FAIR Plan Coverage
A FAIR plan will mainly just provide basic coverage for your property against these four perils: smoke, fire, internal explosions, and lightning.
For those looking for additional coverage with the FAIR plan, the Difference in Conditions (DIC) policy can be an option. The DIC policy extends coverage to include additional perils not covered by the FAIR Plan, bringing the coverage closer to that of a standard homeowners insurance policy.
Why Are More People Moving to The Fair Plan?
In recent years, many insurance companies have been pausing or placing limitations on writing new policies in the state. For instance, State Farm, one of the largest insurers in America, decided to not renew over 30,000 homeowner policies in California in the last 2 years. Insurers like State Farm and Allstate have also stopped writing new property insurance business in California as well. As a result, many homeowners are finding it difficult to obtain insurance from traditional providers and are turning to the FAIR Plan as a temporary solution.
However, not just anyone can apply for the FAIR Plan. As intended to be a last resort option, there will be requirements that you must meet before being able to apply. As an applicant you must own the property in California, as well as meet the specific building requirements. The property would also need to be occupied for more than half the year.
FAIR Plan Cost
Like most other insurance prices, the cost of a FAIR plan will vary from person due to different property factors. This may include age, condition of home, location, homeowner’s claims history, and amount of coverage chosen. Those living in a higher fire risk area will see higher rates compared to those living in a lower risk area.
California FAIR Plan and HO-3 (Traditional Home Insurance Policy) Comparison:
