The Kentucky FAIR Plan — explained

The Kentucky FAIR Plan provides home insurance to high-risk homeowners who’ve struggled to find coverage in the regular insurance market.

Kara McGinley

By

Kara McGinley

Kara McGinley

Senior Editor & Licensed Home Insurance Expert

Kara McGinley is a senior editor and licensed home insurance expert at Policygenius, where she writes about homeowners and renters insurance. As a journalist and as an insurance expert, her work and insights have been featured in Kiplinger, Lifehacker, MSN, WRAL.com, and elsewhere.

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The Kentucky Fair Access to Insurance Requirements (FAIR) Plan was established in 1968 to provide homeowners insurance coverage for homeowners that don’t qualify for coverage on the voluntary market. With FAIR Plans, all licensed insurance companies in the state are legally required to contribute to paying out claims and collecting profits.

FAIR Plans are typically more expensive and less comprehensive than standard homeowners insurance. For this reason, you should generally only go the FAIR Plan route if you’ve exhausted all other options.

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What is the Kentucky FAIR Plan?

The Kentucky FAIR Plan is a last-resort coverage option if you can’t find homeowners insurance on the voluntary market. Insurers may deny you coverage because they deem you as too high risk — this can be for various reasons, like filing too many claims or living in an area that experiences frequent storms.  

Below are a few reasons you may be denied homeowners insurance in Kentucky.

  • You own an older home

  • You live in an area of Kentucky with a high crime rate

  • You live in an area of Kentucky that experiences frequent tornadoes

  • You have a history of filing frequent claims

  • You have a low credit score

Who is eligible for the Kentucky FAIR Plan?

In order to be eligible for a FAIR Plan, many states require that you prove you’ve been denied coverage by multiple insurance companies.

Below are a few other Kentucky FAIR Plan requirements that you’ll need to meet in order to qualify for coverage. [1]  

  • You must apply for coverage through an agent licensed in Kentucky

  • Your house can’t be in foreclosure or have any tax liens on it

  • There are no open claims on the property

  • If the home is over 40 years old, the wiring must be updated to meet current standards

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What does the Kentucky FAIR Plan cover?

The Kentucky FAIR Plan offers multiple types of homeowners insurance, however it doesn’t offer an HO-3 policy — the most common form of home insurance. 

That said, the Kentucky FAIR Plan does offer less comprehensive home insurance in the form of HO-2 policies, also called a broad form policy. HO-2 policies are named peril policies, meaning you’re only protected against the causes of damage specifically listed in your policy. 

Kentucky FAIR Plan HO-2 policies contain six basic protections, and each coverage has its own coverage limit — the maximum amount you’ll be paid out for a covered loss. FAIR Plan coverage limits tend to be lower than coverage limits found in standard home insurance policies. 

Below is a breakdown of Kentucky FAIR Plan HO-2 policy coverages and limits.

Coverage type

What it covers

Coverage limit

Dwelling coverage

Pays to repair or rebuild your home and attached structures — like an attached garage — after a covered event.

$200,000 maximum

Other structures coverage

Pays to repair or rebuild detached structures — like a shed or gazebo — after a covered event.

10% of dwelling limit

Personal property coverage

Pays to repair or replace your personal belongings if they're damaged after a covered event.

50% of dwelling limit

Loss of use coverage

Pays for additional living expenses — like a hotel stay or restaurant meals — if you need to temporarily relocate while your home is being repaired.

30% of dwelling limit

Personal liability coverage

Pays for property damage, medical expenses, or legal fees if you're found legally responsible for damage to someone else's property or their injury.

$100,000 per occurrence

Medical payments coverage

Pays for more minor medical expenses — like an ambulance ride or X-ray — for an injured guest, regardless of who was at fault.

$1,000 per person

The Kentucky FAIR Plan offers additional homeowners insurance options.

The Kentucky Fair Plan offers multiple types of homeowners insurance. If you’re a tenant, you can apply for an HO-4 policy, which is renters insurance. There are also HO-6 condo insurance policies available. And HO-8 policies, which is homeowners insurance designed for older homes. 

What perils are covered by a Kentucky FAIR Plan

The following perils are covered by an HO-2 Kentucky Fair Plan policy:

  • Volcanic eruptions

  • Falling objects

  • Weight of ice and snow

  • Accidental discharge or overflow of water or steam (like a burst pipe)

  • Sudden and accidental tearing apart, cracking, burning, or bulging

  • Freezing

  • Sudden and accidental damage from artificially generated electrical current (like a power surge)

All homeowners insurance policies through the Kentucky FAIR Plan are written on an actual cash value basis, which means depreciation is factored into your claim payout. 

Let’s take a look at an example. 

Say your 10-year-old roof was damaged by a hail storm. With an actual cash value policy, you wouldn’t be reimbursed by your insurance company for the full cost to repair your roof at today’s prices. Instead, they’d take that amount and subtract the 10 years’ worth of wear and tear on your roof to give you a settlement. This means you might only get $5,000 for a roof that would cost $15,000 to repair.

How much does the Kentucky FAIR Plan cost?

The average cost of homeowners insurance in Kentucky is $2,705 per year, which is about $800 more expensive than the national average. FAIR Plans tend to be more costly than standard homeowners insurance, so you can expect to be paying more than $2,705 annually for a Kentucky FAIR Plan. 

Below are some factors that can impact the cost of your FAIR Plan: 

  • Your home’s location. If you live in an area of Kentucky that experiences frequent tornadoes or home break-ins, your rates will likely be higher. 

  • Your home’s rebuild cost. How much you insure your home for will affect your rates.

  • Your home’s construction type and build. The build materials used for your home will affect your rates. If your home has storm-proof windows, for example, your rates may be cheaper.  

  • Your deductible amount. Your deductible is the amount you’re responsible for paying when you file a claim. The higher your deductible is, the lower your premiums will be. 

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How to apply for the Kentucky FAIR Plan

You can apply for a policy with the Kentucky FAIR Plan through its website. Below are a few steps to take. 

  1. Reach out to a Kentucky insurance agent. You can only apply for a Kentucky FAIR Plan through a licensed agent in the state. You may need to have proof that you were denied coverage from multiple homeowners insurance companies. The agents at Policygenius can help you shop for multiple home insurance quotes at once.

  2. Figure out your home’s replacement cost. If you previously had homeowners insurance, you should be able to find your home’s replacement cost on your policy’s declarations page. You can also get an estimate by using a replacement cost calculator or getting an appraisal. 

  3. Compile details about your home. Be prepared with details like your home’s age, construction type, roof age, and more. 

  4. Fill out the application. You can fill out an application online through the Kentucky FAIR Plan website. Once accepted, you’ll need to make your first payment. 

References

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  1. Kentucky FAIR Plan Reinsurance Association

    . "

    Homeowners Manual

    ." Accessed May 12, 2022.

Author

Senior Editor & Licensed Home Insurance Expert

Kara McGinley

Senior Editor & Licensed Home Insurance Expert

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Kara McGinley is a senior editor and licensed home insurance expert at Policygenius, where she writes about homeowners and renters insurance. As a journalist and as an insurance expert, her work and insights have been featured in Kiplinger, Lifehacker, MSN, WRAL.com, and elsewhere.

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