California FAIR Plan

The California Fair Plan has been getting a lot of attention recently in the news. What is the California Fair Plan, what is it, and who is eligible for a policy?

The California Fair Plan

The insurance industry in California has been in a state of flux, with multiple insurance carriers leaving the state or dropping coverage in certain zip codes.   What happens when your house or business is in an area that is considered high risk enough that nobody will provide insurance quotes for you?

This is what the Fair Plan will cover.  It is considered the “last resort” option for property insurance.

Who is Eligible?

Home and Business owners who are in areas where no other company will offer coverage, or if there is a property hazard that makes you uninsurable through other markets.   You must be able to prove that you have made efforts to obtain coverage through other markets, but have been declined.  You are not able to use the California Fair Plan to get a cheaper price if you have another option for insurance.

What is Covered for Homeowners?

Coverage with the Fair Plan is basic coverage only.

For a Dwelling Policy, coverage for the Dwelling and Contents is limited to the following causes of loss: Fire or Lightning, Smoke, and Internal Explosion.  There is an option to add Windstorm, Hail, and Vandalism for an additional premium.

Coverage is Actual Cash Value unless Replacement Cost coverage is purchased. The maximum amount of coverage for your dwelling, contents, and other coverage is $3,000,000.

In the event of a loss, the Fair plan will cover up to 10% of your dwelling limit, the cost to rent a property similar to your insured property.  There is no Extra Expense coverage.

Other coverages that can be added for additional premium include Ordinance/law, Debris Removal, Improvements/alterations/additions, plants/shrubs/trees, inflation guard protection, outdoor radio/tv/awnings/signs, and other structures coverage.

Difference in Conditions Policies

Some carriers offer a DIC, Difference in Conditions, policy, to provide the coverage that a traditional Homeowners policy would have, but that the Fair plan does not cover.  The California Department of Insurance has a list of carriers and how to contact them here.

What is Covered for Business Owners?

Coverage for businesses is similar to the Homeowners coverage, only the maximum amount of coverage for your dwelling, contents, and other coverage is $20,000,000.

The FAIR Plan will cover the following Property (subject to the policy exclusions and terms: Building, Business Personal Property, Personal Property of Others.

For a Commercial Policy, coverage for the Dwelling and Contents is limited to the following causes of loss: Fire or Lightning, Smoke, and Internal Explosion.  There is an option to add Windstorm, Hail, and Vandalism, and Aircraft or Vehicles for an additional premium.

Additional coverages are: Debris Removal, Preservation of Property, Fire Department Service Charge, Pollutant Cleanup and Removal, Newly Acquired or Constructed Property, Personal Effects and Property of Others, Valuable Papers and Records – cost to research, Property Off-Premises, Outdoor Property.

Much like Homeowners, any Commercial FAIR Plan policy holder would need to get a Difference in Conditions policy to get coverage for necessary coverages such as Business Income, theft, water damage, earthquake, etc.

Getting Coverage

You will need a Broker to help you obtain a California FAIR Plan.  Your Broker will make sure that you are eligible for coverage and help you find the right policy for your Home or Business.  If you have a broker who is not a FAIR Plan broker, the FAIR Plan will help you find an appointed Broker at their How to Apply Page.

Fixated Financial & Insurance Solutions is appointed with the FAIR Plan for Commercial policies. We would be happy to help you with your FAIR Plan placement, as well as conduct a diligent search to make sure that there are no alternative markets for you.  Call us today at 855-266-2135 to speak to one of our licensed agents or Account Managers.