What Does California FAIR Plan Insurance Cover & When Should You Use It?

The Fair Access to Insurance Requirements (FAIR) plan is designed to provide property owners with general fire insurance when they may not be able to get policies within the traditional market. Despite popular belief, the program isn’t funded by taxes or the government. Instead, California’s private insurance companies fund the program in response to the difficulties many property owners face from recent wildfires. When you’re unable to procure traditional insurance through no fault of your own, it’s worth taking a look at what the FAIR Plan covers.

Understand Who Is Eligible for FAIR Plan Policies

The FAIR Plan Association typically recommends homeowners view this option as a temporary solution for obtaining hazard insurance. Ideally, you should attempt to get private insurance several times before turning to the FAIR Plan for help. Traditional insurance policies simply offer more coverage compared to ones designed for homeowners with high-risk properties. But the situations the FAIR Plan covers make it extremely beneficial when you fall within the eligibility requirements for this type of policy.

Know the Limits of Basic Coverage

A typical FAIR Plan homeowners insurance policy provides financial coverage for your home’s dwelling along with your personal property if they sustain damage from four main perils. These are fire, internal explosions, smoke, and lightning. Keep in mind you cannot obtain liability coverage through the FAIR Plan. If you experience home or property damage from a covered peril, the plan only insures it for the actual cash value. If you have a need for additional coverage, the FAIR Plan does allow you to modify the policy with several endorsements, provided you agree to pay an increased premium.

Consider the Need for Endorsements

Depending on your circumstances, you might need more coverage than you can get with a standard FAIR Plan policy. In this case, you can modify your policy with special endorsements. While each of these is helpful for people who need them, they can increase the cost of your coverage. Talking to your insurance agent can help you identify which ones work best for you. For instance, you can choose to add coverage for other structures. This will cover the cost of repairs for garages, porches, and sheds that aren’t part of the main dwellings. Alternatively, you might choose fair rental value coverage that covers lost income if the dwelling involved is one you lease and it becomes uninhabitable.

Ask about a Difference in Conditions (DIC) Policy

Homeowners who want to get coverage that’s even more like a traditional policy might be eligible to purchase insurance that fills in the gaps. A DIC policy is a supplemental type of insurance that typically offers coverage for more perils. Having coverage for theft, landslides, earthquakes, or flooding gives you even more peace of mind. When you set up a DIC policy, you might also be able to add liability insurance that protects you financially if someone gets hurt on your property. 

Protect your property with the right insurance coverage even if you have a high-risk home. At Altra Insurance Services, we specialize in helping homeowners navigate the complexities of the California FAIR Plan and other supplemental options to ensure comprehensive protection. We also provide renters, commercial, motorcycle, and car insurance Chula Vista. Contact us today to speak with an expert agent who can guide you through your coverage options and find the best policy for your needs.