The uptick in home-threatening wildfires, state government regulations that have forced insurers to take on more risk when writing policies, and ongoing supply chain issues has brought the home insurance crisis in California to a tipping point.
Because of this, many carriers are no longer insuring homes in certain parts of the state, while others are pulling out of the state's home insurance market altogether. That’s where the California Fair Access to Insurance Requirements (FAIR) Plan comes in.
The California FAIR Plan is a state-mandated program that provides basic home insurance coverage to high-risk homeowners who’ve been denied coverage by standard insurers. Homes in wildfire-prone areas, with a history of frequent claims, or that are older might be considered too high risk to insure on the private market, forcing homeowners to purchase a FAIR plan policy as a last resort.
Key takeaways
California FAIR Plan insurance only covers damage caused by fire, lightning, smoke, and internal explosions.
You’ll need to add on endorsements or buy separate policies for protection from earthquakes, flooding, theft, and personal liability lawsuits.
To qualify for coverage, you need to have been denied coverage on the private market.
All licensed insurance companies in California are required to write policies and share losses under the California FAIR Plan.
What is California FAIR Plan insurance?
The California FAIR Plan was created in 1968 to ensure all homeowners are able to purchase basic home insurance coverage — regardless of whether they’re considered high risk. As an insurance pool, all licensed insurance companies in the state are required to write policies and share in paying out claims through the California FAIR Plan.
Insurance through the California FAIR Plan has become especially vital as wildfires continue to devastate the state, making home insurance harder to find on the private market. Just keep in mind these policies provide very basic coverage at typically higher costs, so they’re best saved as a last-resort option if you can’t find protection elsewhere.
→ Find out what states offer FAIR Plan insurance & how it works
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What does the California FAIR Plan cover?
The California FAIR Plan offers very basic coverage with its standard policy, which includes dwelling and personal property coverage for your home against fire, smoke, lightning, and explosions. And that’s it.
If you want any additional coverages that are included in standard homeowners insurance policies like protection for other structures on your property or theft of your personal belongings, you’ll have to purchase add-ons or separate policies for an additional fee.
What’s the difference between actual cash value and replacement cost coverage?
The most basic California FAIR Plan policy comes with actual cash value coverage for your home and belongings. This means if your home is damaged by a covered peril, your insurance company will pay to rebuild your home — minus the cost of depreciation (aka wear and tear). While this type of coverage is less expensive, it also means you’ll get a smaller claim payout that might not cover the full cost to rebuild your home.
Alternatively, you can opt for replacement cost coverage. This is a more comprehensive form of coverage that does not take depreciation into account when determining the value of your home and belongings. Replacement cost coverage comes at a higher cost, but you’ll also get a larger claim payout.
What perils are covered by the California FAIR Plan?
The basic California FAIR Plan policy covers damage to the structure of your home and personal property caused by four perils:
Fire
Smoke
Lightning
Internal explosion
What perils are not covered by the California FAIR Plan?
The basic California FAIR Plan policy does not cover the following perils:
Windstorm or hail
Explosion
Aircraft or vehicles
Vandalism or malicious mischief
Riot or civil commotion
Theft
Volcanic eruption
Falling objects
Weight of ice, snow, or sleet
Freezing
Sudden accidental damage from artificially generated electrical current
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What coverage add-ons are available through the California FAIR Plan?
You can add on the following coverages to your California FAIR Plan policy for an additional fee for more comprehensive protection.
California FAIR Plan endorsement | What it covers |
|---|---|
Extended dwelling coverage | Your home from the following perils not included in the basic policy: wind or windstorm, hail, explosion, riot or civil commotion, falling aircraft, and volcanic eruption |
Vandalism or malicious mischief | Your home and property from vandalism or malicious mischief |
Additional structures on your property, like a detached garage, shed, or guest house | |
Extended personal property coverage | Personal belongings from the following perils not included in the basic policy: wind or windstorm, hail, explosion, riot or civil commotion, falling aircraft, and volcanic eruption |
Your home and property from earthquakes, through a separate earthquake insurance policy purchased through the California Earthquake Authority (CEA) | |
Lost rental income when a covered loss prevents you from renting out your home or unit | |
Automatically increases the replacement cost of your home to account for a rise in construction, material, and labor costs due to inflation | |
Any mandatory structural upgrades that adhere to local building ordinances | |
Dwelling replacement cost coverage | Insures your home at its replacement cost, which doesn't include depreciation |
Personal property replacement cost coverage | Insures your belongings at their replacement cost, which doesn't include depreciation |
Debris removal | Debris removal and property cleanup after a disaster |
Damage to fences on your property | |
Plants, shrubs, and trees | Up to $250 in coverage per damaged plant or tree |
Awnings and signs | Damage to awnings or signs on your property |
Permitted incidental occupancy | Damage to business property |
Outdoor radio and TV equipment | Damage to outdoor electronic equipment |
Improvements, alterations, and additions | Available for condo owners, this covers damage to improvements or alterations in your unit |
The California FAIR Plan does NOT offer liability coverage
If you’re looking for personal liability coverage, medical payments coverage, or protection against theft, you’ll have to purchase a separate difference in conditions (DIC) policy on top of your California FAIR Plan policy. You can visit the California Department of Insurance website to find a list of private insurance companies in California that offer DIC policies to FAIR plan policyholders. Or check out our list of the best home insurance companies in California to see if they offer this type of coverage.
What policy deductibles are available through the California FAIR Plan?
The California FAIR Plan offers deductibles that range from $100 to $10,000. As a refresher, your policy deductible is the amount that you pay out of pocket before your insurance kicks in.
A higher policy deductible will mean lower insurance premiums, but it also means you’ll have to pay more out of pocket after you file a claim. Be sure to choose a deductible you can comfortably afford should disaster strike.
Who is eligible for the California FAIR Plan?
To qualify for insurance through the California FAIR Plan, you need to prove that you’re unable to find coverage through a traditional insurance company.
In addition, your home must meet the following criteria to be eligible for coverage:
In good condition
Not boarded up
Secured with all doors and windows locked
No broken windows
Has not been vacant for more than a year
Isn’t used for illegal activity
How long does a California FAIR Plan policy last?
California FAIR Plan policies are issued for a one-year term, though you’re encouraged to shop around for a policy on the private insurance market often. This is because traditional home insurance policies offer more comprehensive coverage at a more affordable price.
California FAIR Plan policies are meant to be used only as a temporary stop-gap until you qualify for coverage on the private market, says California FAIR Plan spokesperson Hilary McLean.
“For most homeowners, the FAIR Plan is a temporary safety net, utilized until coverage offered by a traditional carrier becomes available,” says McLean. “The FAIR Plan encourages applicants and policyholders to search the market at least annually.”
How much does the California FAIR Plan cost?
Home insurance through the California FAIR Plan is typically more expensive than traditional home insurance policies since there’s more risk of your filing a claim.
Actual rates for California FAIR Plan policies weren’t available as of February 2022. However, we can tell you that you’ll likely pay more than $1,565 a year — the average cost of homeowners insurance in California according to our analysis of 2022 home insurance rate data.
As always, your own policy cost will depend on factors like your ZIP code, the age and condition of your home, how much coverage is in your policy, and your deductible amount.
How to get a California FAIR Plan quote
Follow these steps to get a quote for a California FAIR Plan policy:
Look over your previous home insurance policy. This will help you know what coverages and limits you might want to add to your new policy.
Apply for coverage on the private market. You can do this with the help of a licensed Policygenius agent by answering a few questions about yourself and your home. If you qualify for a traditional policy — great! If not, move on to step 3.
Find a California FAIR Plan broker. Use the California FAIR Plan “Find a Broker” tool and enter your ZIP code to get matched with a licensed agent in your area that can help you purchase a FAIR Plan policy.
Talk over your coverage options. Since the basic FAIR Plan policy is so limited, you’ll likely want to tack on coverage add-ons and even take out separate earthquake insurance and DIC policies.
Work with the broker to submit your application. This will include agreeing to a credit check and potentially having your home inspected.
Review your quote. Once you’ve received your quote, read through the policy to make sure you’re happy with your coverage and limits.
Sign your policy and make a payment. After you’ve signed your policy, you’ll need to pay your first policy premium before your coverage will go into effect.
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What payment options are available through the California FAIR Plan?
You have a few different options to pay your California FAIR Plan insurance premiums:
Online through your checking or savings account
Online using your credit card
By mailing a check or money order to: California Earthquake Authority P.O. Box 76922 Los Angeles, CA 90076
Frequently asked questions
Does the California FAIR Plan cover wildfires?
Yes, the most basic California FAIR Plan policy covers the actual cash value of your home and belongings if they’re damaged from wildfires or smoke.
Does the California FAIR Plan cover earthquakes?
No, the California FAIR Plan does not cover your home and belongings from earthquake damage — and neither do traditional home insurance policies. Instead, you’ll have to purchase a separate earthquake insurance policy through the California Earthquake Authority.
What is the most common type of claim filed by California FAIR Plan policyholders?
The most common type of claim filed by California FAIR Plan policyholders are fire claims, according to the California FAIR Plan Association.
