How Does California FAIR Plan Insurance Work?

California FAIR Plan insurance is home insurance for high-risk homeowners who are unable to qualify for coverage in the private marketplace. FAIR Plan coverage is limited — the base policy covers damages only from fire, lightning, smoke and internal explosions. Additional coverage can be purchased but not always to the same level as a standard policy.

Below, we explain how the California FAIR Plan works, if you qualify and how to buy it.

Note: This article was updated on July 18, 2023 for stylistic edits and to include inline citations and a correction to the explanation of fair rental value and related information.

Key Takeaways California FAIR plans are last-resort insurance solutions for homeowners who are repeatedly denied coverage by traditional carriers. A FAIR plan base policy includes coverage for only fire, lightning, smoke and internal explosions. Homeowners can pay extra to insure their home against additional perils like windstorms and vandalism. Buying a differences in conditions policy can provide extra protection, including coverage for theft and personal liability.

How the California FAIR Plan Insurance Works

In California, the Fair Access to Insurance (FAIR) Plan provides home insurance coverage for homeowners struggling to purchase insurance in the private marketplace. It is often called California Fair Plan fire insurance because many of their customers are denied private insurance due to their property’s vulnerability to wildfires. This leaves some homeowners in high-risk areas vulnerable to property losses with none of the financial relief that a homeowners policy can offer.

The FAIR Plan is intended to be a temporary solution until homeowners qualify for a conventional insurance policy with a private insurer.

Since it is meant to be a last-resort insurance option, you should apply only if you’re unable to find an insurance company in the traditional marketplace that will accept your application.

The FAIR Plan is not a government-funded agency and is not taxpayer-funded, like flood insurance policies offered through the Federal Emergency Management Agency (FEMA).^[1][2] Instead, member companies can join the network and the FAIR Plan issues policies on their behalf.^[2]

What the California FAIR Plan Covers

The California FAIR Plan is a named peril policy and the base policy insures your home against only three named perils: fire and lightning, smoke and internal explosions.^[3] If you buy extended coverage, you can expand your list of covered perils to include:^[4]

• Windstorm
• Hail
• Explosion
• Riot/civil commotion
• Aircraft and vehicles
• Volcanic eruption
• Vandalism and malicious mischief

Other coverage options that California FAIR Plan customers may buy may include:^[4]

Inflation Guard	Adjusts the coverage limits of a policy to keep pace with inflation so you can better manage the rising costs of construction labor and materials over time.
Dwelling Replacement Cost	Get reimbursed for damages to your dwelling’s structure without deduction for depreciation (Not available to dwellings over 25 years old unless the roof has been updated within the past 25 years).[4]
Other Structures	Coverage also applies to fences, detached garages and other structures on your property.
Fair Rental Value	If your home becomes uninhabitable as a result of a covered loss, pays the homeowner the value of what your home would have rented for at that time over a time period to cover certain living expenses.[5][6]
Ordinance or Law	Pays for the cost to repair or replace the dwelling to comply with building codes and zoning laws following a covered loss.
Personal Property Replacement Cost	Similar to dwelling replacement cost, it pays to replace damaged items at today’s cost and not its actual cash value.
Plants, Shrubs and Trees	Extends coverage to some of your landscaping plantlife.

What the California FAIR Plan Does NOT Cover

The California FAIR Plan will not cover losses resulting from the following hazards or perils:

• Theft
• Falling objects
• Weight of ice, snow or sleet
• Accidental discharge/overflow of water or steam
• Freezing
• Sudden accidental electrical surges

While some perils, like freezing, may not be a high priority for many California property owners, the lack of coverage for theft and falling objects (e.g., a tree branch falls on your roof) and more can be concerning.

California FAIR Plan does not offer liability coverage, either. Liability coverage typically applies when a guest suffers an injury or property damage while on your property or because of something on your property, such as an uneven stair step.

Get More Coverage With a DIC Policy

Coverage for additional perils and personal liability is purchasable via a differences in conditions (DIC) policy. DIC policies are companion policies purchased from other carriers and are intended to plug the holes in your coverage left exposed by a FAIR Plan. The California Department of Insurance provides a starting list for DIC policy providers.

Coverage Is Due To Expand

Since more than 200,000 Californians are covered under the FAIR Plan policy, California Insurance Commissioner Lara is pushing for the FAIR Plan to expand their homeowners insurance coverage, according to a Sept. 2021 press release. Expanding the coverage under the FAIR Plan policy may help homeowners save money, reducing the need to supplement their coverage by buying multiple policies.

Although the FAIR Plan is marketed as a temporary insurance solution, these pushes are making FAIR Plan coverage more comparable to standard home insurance.

How Much Does the California FAIR Plan Cost?

Since California FAIR Plan prospective customers often have high-risk properties, they often see higher costs. The average cost of home insurance in California is $1,044.34 per year ($87.03 per month) so FAIR Plan customers in California should expect to see rates around this ballpark figure and higher. Purchasing DIC policies to expand your coverage will further increase your overall home insurance costs.

FAIR Plan customers can choose a deductible ranging from $250 to $10,000.^[7] Your deductible is the cost you pay out-of-pocket before your insurance coverage kicks in. Generally, the higher your deductible, the lower your insurance premiums.

Who’s Eligible for California’s FAIR plan?

The FAIR Plan is available to property owners (homeowners and landlords) with the following eligibility criteria:^[3]

• Owner-occupied: One- to four-unit dwellings, where the owner occupies at least one of the units.
• Seasonal rental: Residential properties that are rented out for less than one year.
• Rentals: One- to four-unit dwellings that you rent out to a tenant for at least one year.

Personal property coverage under the California FAIR Plan is also available to renters and condo owners.^[3]

How To Apply for California’s FAIR plan

A FAIR Plan can be bought with the help of an insurance broker. There are no options for purchasing coverage online, as you would with some private insurance companies, but you can receive a free quote.

1. Complete the FAIR Plan Form To Get In Touch With a Broker

The California FAIR Plan website has a free online tool to find a broker. You must complete a form before being contacted by a professional insurance broker registered with the FAIR Plan. There is no additional cost when using a FAIR Plan insurance broker.

2. Work With the Broker To Find an Insurance Policy

The broker will typically start by helping you to obtain coverage in the traditional insurance market. If the search turns out to be unsuccessful, the broker should walk you through the steps for buying a home policy through the FAIR Plan.

3. Explore Your Coverage Options

You can work with your broker to discuss your coverage options. Since the base policy for a FAIR Plan is limited in coverage, your broker should help explain opportunities for expanding your coverage with DIC insurance policies before you finalize your purchase of a FAIR Plan policy.