The California FAIR Plan for Home Insurance

The California FAIR plan is the California home insurer of "last resort." Agents, Brokers, and Consumers should only apply to the California FAIR plan after an exhaustive search has turned up no other insurance coverage options available.

The FAIR plan is unique in that it is NOT a full coverage home insurance policy, rather a partial home insurance policy that really only covers you from the following perils: Fire, Internal Explosion, and Smoke with options for Extended Coverage and Vandalism/ Malicious Mischief. Major coverage holes remain, such as: Water Damage, Theft, and Liability. These three coverages are best sold within another package -called the Difference in Condition policy, which acts as secondary home insurance contract. In other words, best practice dictates that you purchase two home insurance policies, not just one. Confused? The issue is that many consumers do not seem to know this.

Another consideration for Californians is another home insurance option: Non Admitted Insurance. Non admitted insurance, is insurance that is not regulated by the California Department of Insurance. These insurers do not participate in the California Insurance Guarantee Association Lloyds of London is the most notable non admitted insurer, but they are also NOT the only non admitted carrier. As with the FAIR plan, non admitteds are only for those that cannot find regular homeowners insurance.

Non Admitted home insurance is typically similar to normal home insurance in that you really only typically purchase just one policy. Often written on HO5 and HO3 forms these policies closely mimic a regular preferred carriers policy.

The FAIR plan was originally created in the 1960s to deal with the loss of insurance coverages after some large wildfires. In recent years though the use of this policy has exploded due to the 2017 and 2018 wildfires that forced Merced Property and Causality to go out of business. Many home insurers having started retreating and either leaving the state or reducing their exposure.

Marin and Sonoma homeowners do have options for harder to write home insurance, but the costs often are very high, sad as it is to say regardless of using the FAIR plan option for a non admitted option.

The good news here is that Marin, Sonoma, and San Francisco counties are not the hardest places to get home insurance in the state, believe it or not.

One question invariable consumers will ask me is this: What Should I do if I have trouble finding home insurance: My answer is simple - Contact at Least Two Captive Agent Insurers (State Farm, Farmers, AAA, USAA, etc) and One Independent Agent to shop your options around. Be up front with them that you are not the only person that you have contacted. Ask them what their experience and turn around time is. Start the moment that you learn your policy is being non renewed, in other words DO NOT WAIT till the last week of coverage.

Scott W Johnson is the owner of Marindependent Insurance Services LLC, a Certified Green based Marin County business specializing in Independent Insurance in the Bay Area. CA License 0H11625. Thanks for Reading.