What Is California FAIR Plan Insurance?

The Califᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚornia FAIR Plan provides fire insurance for high-risk homꦍes and businesses that private insurers won’t cover. FAIR stands for Fair Access to Insurance Requirements.

The plan, established by state legislators in 1968, is a pool of all insurers licensed to sell property and casualty insurance in California. It’s designed primarily to help California homeowners who can’t find basic fire insurance in the traditional marketplace. Those numbers have ܫbeen rising since the risk of wildfires has 🃏grown.

Why the California FAIR Plan Exists

Amid the rise in risks stemming from 澳洲幸运5开奖号码历史查询:wildfires and insurance rate hikes, Californi🤪ans now have fewer options for fire insurance. That’s because more insurers have decided against offering new coverage or renewing current policies. Therefore, many Californians have been forced to♛ rely on the FAIR Plan for basic fire coverage.

From September 2019 to June 2024, the number of FAIR Plan policies for California homes soared by 164%, the plan’s data shows.

How California FAIR Plan Insurance Works

The plan is run by the California FAIR Plan Association, which is neither a state agency nor a public entity. The California Department of Insurance oversees the association, including༒ approval of proposed rate changes.

Under the California FAIR Plan, insurers that do business in California share the financial burden of selling policies offering basic, temporary protection against financial losses due t🎃o home and business fires. The plan doesn’t receive taxpayer funding. Instead, funding comes primarily from the sale of policies.

The FAIR Plan has taken on greater importance as some insurers in California have paused issuing new property insuꩲrance policies or renewing existing policies. The state insurance commissioner has been working with insurers to ease these self-imposed re🍎strictions.

Under a statewide proposition passed in 1988, insurers in California can legally pick where they do and do not want to provide coverage. As such, property insurers are focusing more on areas of California that are considered less risky. This mostly impacts homeowners and business owners in areas at high risk of wildfires where the FAIR Plan now may be the 澳洲幸运5开奖号码历史查询:only option for insurance.

What Does the California FAIR Plan Cover?

A basic FAIR Plan policy covers just one thing: damage to a property or its contents caused by fire, lightning, smoke, or internal explosion. While a FAIR Plan policy fulfills a 澳洲幸运5开奖号码历史查询:mortgage company’s requirement for property insurance, it doesn’t cover items like theft, vandalism, floods, hail, earthquakes, or personal liability.

The basic FAIR Plan policy provides up to $3 million 💮in coverage for residential properties and $20 million for commercial pro🐓perties. Aside from basic coverage, the FAIR Plan sells optional windstorm, hail, and vandalism coverage.

In addition, a California homeowner can buy what’s known as 澳洲幸运5开奖号码历史查询:“difference in conditions” (DIC) coverage. This type of policy provides coverage that’s typically part of a standard 澳洲幸运5开奖号码历史查询:home insurance policy but isn’t included in a FAIR Plan policy. For instance, a DIC policy can cover items like theft, water damage, and 澳洲幸运5开奖号码历史查询:personal liability.

The FAIR Plan doesn’t sell DIC policies. Instead, you must shop for a DIC policy on your own or with help from an insurance agent or broker.

Eligibility Criteria for California FAIR Plan

The California-based United Policyholders consumer advocacy group states that any homeowner who “has made a diligent but unsuccessful effort” to purchase 澳洲幸运5开奖号码历史查询:home insurance can turn to the FAIR Plan for basic fire coverage. The plan will insure a home, even one in an area at high risk of wildfires, if it meets the plan’s 澳洲幸运5开奖号码历史查询:underwriting standards.

Re🏅sidentia꧃l properties that qualify for FAIR Plan coverage are:

• Owner-occupied homes: This refers to one- to four-unit dwellings where the owner lives in at least one of the units.
• Seasonal rentals: These are dwellings that are rented for less than one year. This applies to part or all of a dwelling.
• Long-term rentals: These are one- to four-unit dwellings that are rented to a tenant for at least one year.
• Condos: The FAIR Plan covers personal property and improvement coverage for 澳洲幸运5开奖号码历史查询:condominiums.
• Renters’ personal property: A tenant of an apartment or single- or multi-unit dwelling can buy personal property coverage.

How to Get California FAIR Plan Insurance

Here are the steps fꦡor getting 🍃California FAIR Plan insurance:

1. Determine your eligibility. With help from an insurance agent or broker, you can figure out whether you qualify for FAIR Plan coverage. The main consideration is whether you’ve been unable to purchase coverage from a traditional insurer. In fact, you must prove that you’ve been rejected by at least two insurance companies.
2. Shop for a policy. An insurance broker or agent can help you find the right FAIR Plan coverage for your property.
3. Pick your coverage. Since the FAIR Plan only provides basic fire insurance, you may want to supplement it with policies that cover items such as earthquakes, theft, 澳洲幸运5开奖号码历史查询:vandalism, and personal liability.
4. Submit your application. On the application, you’ll supply information such as your home address, your preferred dollar amount for the deductible, and the name of your mortgage company.
5. Pay your premium. Premiums for FAIR Plan coverage tend to be higher than those for traditional property or fire insurance.
6. Keep shopping. Even after getting a FAIR Plan policy, you should continue hunting for coverage in the traditional market. You may be able to lower your premium by buying a regular policy afterward.

Frequently Asked Questions (FAQs)

The Bottom Line

For some Californians, FAIR Plan coverage is the only option for insuring their home or business, especially those in areas at high risk of wildfires. This basic coverage applies primarily to fire damage, and it g𒆙enerally costs more than traditional property coverage. An insurance agent or broker can help you determine whether this last-resort policy is the best option to protect your property.