California FAIR Plan insurance is basic fire coverage for homes and buildings that traditional insurance companies will not cover. A FAIR Plan dwelling policy covers fire, lightning, internal explosion, and smoke. It does not cover water damage, theft, or liability. That is why most owners pair it with a difference in conditions (DIC) policy from another insurer.
Panorama Insurance Agency has helped Los Angeles area homeowners and property owners since 1973 from our Northridge office. As an independent agency, we first shop your property with multiple traditional carriers. If the FAIR Plan is the only option, we help you build the rest of your coverage around it.
What Is the California FAIR Plan?
The California FAIR Plan is an insurer of last resort. It was set up by state law in 1968 so property owners can get basic fire insurance when the traditional market will not cover them through no fault of their own.
- It is a pool made up of all insurers licensed to sell property insurance in California.
- It is not a state agency, and it is not funded by taxpayers.
- It covers both homes and commercial properties.
- It is meant to be temporary, until a traditional insurer will cover you again.
Who Needs the FAIR Plan?
Most people come to the FAIR Plan after a non-renewal or after several insurers turn them down. Common reasons in our area include:
- A home near brush, canyons, or hillsides with high wildfire risk
- A non-renewal notice from a current insurer
- A property that is vacant or under renovation
- An older building that insurers will not take on
The FAIR Plan asks your broker to do a diligent search of the traditional market first. If a regular insurer will cover you, the FAIR Plan is not the right fit.
What Does a California FAIR Plan Policy Cover?
Dwelling Policies
The FAIR Plan dwelling policy is a named peril policy. It pays only for the causes of loss listed in the policy:
- Fire and lightning
- Internal explosion
- Smoke
Optional coverages, such as vandalism and malicious mischief, cost extra. Dwelling policies are available for owner-occupied homes with 1-4 units, homes rented to tenants for at least one year, seasonal rentals, renters, and condo unit owners.
Commercial Policies
The FAIR Plan also covers apartment buildings with five or more units, retail shops, offices, manufacturers, buildings under construction, and farms and wineries. The commercial policy covers fire, lightning, and internal explosion, with optional coverages at extra cost.
Coverage Limits
- Residential: up to $3 million for all coverages combined.
- Commercial: up to $20 million per building, with up to $100 million per location.
The FAIR Plan does not estimate what it would cost to rebuild your home. Setting the right limit is up to you and your broker, so we review rebuild cost with you before you apply.
What the FAIR Plan Does Not Cover
- Water damage, such as a burst pipe or a leaking water heater
- Theft of your belongings
- Liability if someone is hurt on your property
- Earthquake. FAIR Plan customers can get earthquake coverage through the California Earthquake Authority. See earthquake insurance.
- Flood. Flood needs a separate policy. See What Does Flood Insurance Cover?
Most of these gaps can be filled with a difference in conditions policy.
What Is a Difference in Conditions (DIC) Policy?
A difference in conditions policy is a separate policy that covers what the California FAIR Plan leaves out, such as water damage, theft, and liability. It is designed to work with a FAIR Plan policy so that, together, the two policies give you coverage similar to a full homeowners policy. The FAIR Plan does not sell DIC policies. They come from other insurance companies, usually through an agent or broker.
What a DIC Policy Usually Covers
Each DIC policy is different. Depending on the insurer and the options you choose, a DIC policy can include:
- Water damage from sudden leaks
- Theft
- Personal liability
- Other causes of loss the FAIR Plan does not name
Fire is left to the FAIR Plan, so the two policies do not pay for the same thing.
How the FAIR Plan and a DIC Policy Work Together
Think of it as two halves of one homeowners policy:
- A brush fire damages your home. Your FAIR Plan policy responds.
- A pipe bursts under the kitchen sink. Your DIC policy responds, if water damage is included.
- A guest trips on your front steps and sues. Your DIC policy’s liability coverage responds, if included.
You pay two premiums and may have two deductibles. In return, you close the gaps a FAIR Plan policy leaves on its own.
What to Ask Before You Buy a DIC Policy
- Does it include water damage, and is there a separate limit for it?
- How much liability coverage does it include?
- Does it cover your personal belongings, and for how much?
- Does it pay for a place to stay if your home cannot be lived in?
- What are the deductibles?
- Is the insurer admitted in California or a surplus lines company?
- What happens to the DIC policy if your FAIR Plan policy ends?
Is a DIC Policy Worth It?
For most homeowners on the FAIR Plan, yes. Without one, a burst pipe, a break-in, or an injury claim on your property is not covered at all.
How to Apply for the California FAIR Plan
- Work with a broker. FAIR Plan staff cannot advise you on coverage or limits. A broker can, at no extra cost to you. Not every broker is registered with the FAIR Plan.
- Let your broker search the traditional market. If a regular insurer will cover you, the FAIR Plan is not the right fit.
- Choose your coverage. Pick your limits and any optional coverages.
- Add the missing pieces. Line up a DIC policy, and consider earthquake and flood coverage.
How Much Does the California FAIR Plan Cost?
Your price depends on the property’s location, construction, distance from fire protection, and the limits you choose. Two ways to manage the cost:
- Wildfire hardening discounts. Homes and businesses that take qualifying steps to resist wildfire can get a discount of up to 20 percent on the wildfire portion of the FAIR Plan premium.
- Monthly payments. The FAIR Plan offers monthly payments without a fee.
Remember to budget for the DIC policy too.
Alternatives to the California FAIR Plan
The FAIR Plan should be your last stop, not your first. Before you apply, and again at every renewal, look at:
- Traditional insurers. An independent agency can check many carriers at once. One insurer’s “no” is not every insurer’s “no.”
- Surplus lines insurers. These companies can cover properties that standard insurers will not. They are not backed by the California Insurance Guarantee Association, so ask about the insurer’s financial strength.
- Clearinghouse offers. The FAIR Plan can share your policy information with member insurers, who may offer to move you back to a regular policy.
- Making your home safer. Brush clearance and fire-resistant upgrades can help you qualify with a traditional insurer later.
FAIR Plan Help for Northridge and San Fernando Valley Homeowners
If you live near the foothills and got a non-renewal notice, we can help you compare traditional options, apply for the FAIR Plan if needed, and add a DIC policy so you are not left with fire-only coverage. Related reading:
- Wildfire Home Insurance Coverage in Los Angeles
- What Is Covered Under Home Insurance for Wildfires?
- Does Homeowners Insurance Cover Smoke Damage in California?
- House Fire Insurance Claim Tips
- Landlord Insurance in California
Visit us at 19302 Citronia Street, Northridge, CA 91324, call (818) 781-6630 or (747) 277-7170, or email info@panorama-ins.com.
California FAIR Plan FAQs
Does the California FAIR Plan cover water damage?
No. Water damage is not covered. A difference in conditions policy can add it.
Does the FAIR Plan include liability coverage?
No. If someone is hurt on your property, you need liability coverage from a DIC policy or another policy.
Does the FAIR Plan sell DIC policies?
No. DIC policies come from other insurance companies. Your broker can help you find one.
What is the most the FAIR Plan will cover on a home?
Up to $3 million for all residential coverages combined.
Can I insure a rental property with the FAIR Plan?
Yes. The FAIR Plan writes dwelling policies for 1-4 unit homes rented to tenants for at least one year, as well as seasonal rentals.
Can I leave the FAIR Plan later?
Yes. The FAIR Plan is meant to be temporary. We re-shop your home with traditional insurers so you can move when coverage becomes available.
Does the FAIR Plan cover earthquakes?
Not in the fire policy. FAIR Plan customers can get earthquake coverage through the California Earthquake Authority.
Need FAIR Plan and DIC coverage, or a better option? Contact Panorama Insurance or call (818) 781-6630.
