Texas FAIR Plan review: Expensive last-resort home insurance

The Texas FAIR Plan provides home insurance policies to high-risk homeowners who’ve been denied coverage by at least two insurers on the standard market.

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By

Jennifer GimbelSenior Managing Editor & Home Insurance ExpertJennifer Gimbel is a senior managing editor and home insurance expert at Policygenius, where she oversees our homeowners insurance coverage. Previously, she was the managing editor at Finder.com and a content strategist at Babble.com.&Pat HowardManaging Editor & Licensed Home Insurance ExpertPat Howard is a managing editor and licensed home insurance expert at Policygenius, where he specializes in homeowners insurance. His work and expertise has been featured in MarketWatch, Real Simple, Fox Business, VentureBeat, This Old House, Investopedia, Fatherly, Lifehacker, Better Homes & Garden, Property Casualty 360, and elsewhere.

Reviewed by

Ian Bloom, CFP®, RLP®Ian Bloom, CFP®, RLP®Certified Financial PlannerIan Bloom, CFP®, RLP®, is a certified financial planner and a member of the Financial Review Council at Policygenius. Previously, he was a financial advisor at MetLife and MassMutual.

Updated|1 min read

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Texas FAIR Plan

Texas FAIR Plan logo

Policygenius rating

Our proprietary ratings methodology takes multiple factors into account, including customer satisfaction, cost, financial strength, and policy offerings. See the “Ratings methodology” section for more details.
Full orange starFull orange starHalf orange starEmpty gray starEmpty gray star

2.3

AM Best rating

AM Best is a global credit rating agency that scores the financial strength of insurance companies on a scale from A++ (Superior) to D (Poor).

NA

Cost

Using a mix of internal and external rate data, we grade the cost of each insurance company's premiums on a scale from least expensive ($) to most expensive ($$$$$).

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The bottom line

Founded in 1995, the Texas FAIR Plan is a state-mandated insurer of last resort that provides property insurance to homeowners in Texas who aren't able to find coverage on the voluntary market.

Because these policies are intended for homes considered too high risk to qualify for standard homeowners insurance, the coverage you're getting isn't very good — and you're likely to pay significantly more for it than you would for the same amount of coverage through a standard insurer. For that reason, you'll only want to consider the Texas FAIR Plan if you're in a bind and there are no other insurance options for which you qualify.

Pros

  • Provides Texas homeowners with a safety net when they aren't eligible for coverage on the voluntary market

  • One of the more comprehensive FAIR Plan policies in the U.S.

Cons

  • Significantly more expensive compared to what you'd find on the voluntary market

  • Limited coverage options

  • Doesn't cover damage from fallen trees, building collapse, glass breakage, or weight of ice or snow

Basic coverages offered

There are several different types of policies available through the Texas FAIR Plan depending on the type of property you own or live in.

  • HO-A Homeowners Policy

  • TDP-1 Dwelling Policy

  • HO-CONB Condominium Policy

  • HO-BT Tenant Policy

Here’s an example of the coverages included in a standard Texas FAIR Plan homeowners insurance policy:

  • Dwelling: Covers damage to your home for its actual cash value after a covered loss. The FAIR Plan offers up to $1 million in dwelling coverage.

  • Other structures: Covers damage to standalone structures on your property, such as detached garages, sheds, and fences. This coverage is 10% of your policy's dwelling coverage limit.

  • Personal property: Covers damage to your personal property, like clothing, furniture, and appliances at its actual cash value after a covered loss. This coverage is 50% of your policy's dwelling coverage limit by default, but you can opt for higher amounts for an additional fee.

  • Loss of use: Covers hotels, restaurant, and transportation if you’re unable to stay in your home while repairs are made after a covered loss. This coverage is 10% of your dwelling limit.

  • Liability: Covers legal and medical bills if someone is injured or their property is damaged while at your home and you’re found legally responsible. You can choose $100,000 or $300,000 in liability coverage.

  • Medical payments: Covers medical bills for guests injured on or off your property — regardless of who’s at fault. This coverage is automatically set at $5,000 per person and $25,000 per occurrence.

What perils are covered by the Texas FAIR Plan?

The Texas FAIR Plan provides coverage against roughly 10 causes of damage or loss.

  • Fire

  • Lightning

  • Sudden and accidental damage from smoke

  • Windstorm and hail

  • Explosion

  • Aircraft and vehicles

  • Vandalism and malicious mischief

  • Riot and civil commotion

  • Theft

What perils are not covered by the Texas FAIR Plan?

The following perils are not covered by a Texas FAIR Plan insurance policy:

  • Falling trees, limbs, or other objects 

  • Collapse of a building or part of one 

  • Breakage of glass 

  • Damage from the weight of ice, snow, or sleet 

  • Freezing of plumbing, heating, air conditioning, or automatic fire protection sprinkler system or household appliance 

  • Mold, fungi, or other microbe remediation

  • Backup of sewer or drains 

  • Items that may be scheduled, such as expensive jewelry 

Additionally, wind and hail coverage is not available to policyholders living in a designated catastrophe area in any of these areas:

  • 14 coastal counties

  • A portion of Harris County located east of State Hwy. 146

  • The city limits of Pasadena, Morgan’s Point, Shoreacres, Seabrook, or LaPorte

If you live in any of these areas, you’ll be required to have a windstorm, hurricane, and hail exclusion endorsement attached to your policy, which limits your coverage but also lowers your premium significantly. However, you'll still need this coverage if you live in any of these areas. To get it, you’ll need to contact the Texas Windstorm Insurance Association (TWIA) or a surplus lines insurer that specializes in wind-only policies. 

Additional coverages offered

The following coverage add-ons are available in a Texas FAIR Plan home insurance policy:

  • Replacement cost coverage for dwelling

  • Replacement cost coverage for personal property

  • Sudden and accidental discharge of water or steam

  • Additional insured

  • Additional premises liability coverage

  • Fair rental value

  • Condo loss assessment coverage

  • Unit owners rental to others

Ratings methodology

Price

1.9/5

The Texas FAIR Plan earns a low score on our price rating scale due to its prohibitively expensive home insurance rates compared to the amount of coverage that you're getting. Texas homeowners should expect to pay about $4,250 per year for a policy with $300,000 in dwelling coverage, according to our analysis.

Coverage options

2.9/5

The Texas FAIR Plan earns a below-average score on our coverage options rating scale due to its rather limited additional coverage options and the fact that replacement cost dwelling protection needs to be added to policies for an additional premium.

Financial strength

NA

While the Texas FAIR Plan hasn't itself been rated or evaluated by A.M. Best, it it only works with home insurance companies with an A- rating or higher.

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How much does the Texas FAIR Plan cost?

Home insurance through the Texas FAIR Plan costs around $4,250 for a policy with $300,000 in dwelling coverage — roughly 46% higher than the Texas state average, according to our analysis.

Homeowners in places like Aransas, Jefferson, and Travis County can expect to pay the least for FAIR Plan coverage, while those in Cooke, Harris, Jack, and Young can expect to pay the most, according to the FAIR Plan's rating guidelines. [1]

Who is eligible for the Texas FAIR Plan?

To qualify for insurance through the Texas FAIR Plan, you must meet a certain set of eligibility criteria.

  • Proof that you were denied coverage by two private home insurance companies in Texas

  • Proof that you have no valid offer of comparable home insurance from an insurer in the state

  • Live in a one- or two-family house, rental home, rental apartment, townhouse, manufactured home, or condo that meets underwriting standards

Who is not eligible for the Texas FAIR Plan?

If any of the following apply to you or your home, you won't qualify for the Texas FAIR Plan.

  • Property condemned due to its condition 

  • Property in disrepair or with existing damage 

  • Vacant property 

  • Property with excessive or unusual liability exposure — i.e. dangerous animal, pool or trampoline not within a fenced yard

  • You were convicted for arson, fraud, or other insurance-related offenses

  • Have more than eight paid claims — excluding glass claims — within the past three years 

  • Live in a mobile home — unless the wheels are removed and the mobile home is tied down 

  • Have a farm or ranch used for business on the property

  • Your home is occupied for business use 

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How to get a Texas FAIR Plan quote

Follow these steps to get a quote for a Texas FAIR Plan policy:

  1. Apply for insurance on the voluntary market. You’ll need to show proof you’ve been denied coverage from two private insurance companies before you’ll qualify coverage through the Texas FAIR Plan.

  2. Find an agent that sells Texas FAIR Plan insurance. You can use the Texas Fair Plan Association website to find an agent near you.

  3. Talk through your coverage options. Your agent will walk you through the different coverage options available and discuss what makes the most sense for your home and budget.

  4. Work with the agent to submit your application. This will include answering questions about yourself and your home, having your credit checked, and potentially having your home inspected.

  5. Review your quote and sign up for a payment plan. Once you have your official quote and you’re happy with your coverage, you’ll need to choose a payment plan. We’ll go through the different options available below.

  6. Sign your policy. Once your payment plan is set, the last step will be to sign your policy.

What payment options are available through the Texas FAIR Plan?

The Texas FAIR Plan does not accept payments via credit cards or debit cards. Instead, you’ll need to pay through one of three ways.

  • Through its online portal using direct withdrawal from your checking or savings account

  • Making a payment over the phone with a TFPA representative by calling 800-979-6440

  • Mailing a check to: Texas FAIR Plan Association P.O. Box 733916 Dallas, TX 75373-3916

When you apply for coverage, you’ll need to choose a 10-pay, 4-pay, or 2-pay payment plan. You can make each payment through any of the above methods, or set up recurring auto payments through your bank account.

Keep in mind you can’t change your payment plan after you’ve chosen it at the time of submitting your application.

How long does a Texas FAIR Plan policy last?

Texas Fair Plan policies are issued for a one-year term. And every two years, you must reapply for home insurance on the standard market.

If you’re once again denied coverage by at least two home insurance companies in Texas and don’t receive a valid offer of comparable home insurance, you can reapply for coverage through the Texas Fair Plan.

Compare home insurance rates in Texas

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Texas FAIR Plan vs. other home insurance options

Company

Policygenius rating

AM Best rating

Cost

Texas FAIR Plan

2.3/5

NA

$$$$$

American Modern

4.9/5

A+

$$$

Orchid Insurance

4.6/5

NA

NA

Foremost

4.2/5

A

$$$$

Assurant

4.1/5

A+

NA

Berkshire Hathaway Guard Insurance Companies

4.0/5

A+

$$$$$

SageSure

3.9/5

NA

NA

Armed Forces Insurance

3.7/5

NA

$$$

California FAIR Plan

3.6/5

NA

$$$$$

Velocity Risk

3.5/5

A

$$$

Bamboo Insurance

3.4/5

NA

NA

Security First Insurance

3.3/5

NA

$

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Frequently asked questions

What does the Texas FAIR Plan cover?

A Texas Fair Plan homeowners policy includes the standard dwelling, other structures, personal property, liability, medical payments, and loss of use coverages you’d get with a traditional home insurance policy.

It also covers you from the following perils: fire, lightning, sudden and accidental damage from smoke, explosion, aircraft and vehicles, vandalism and malicious mischief, theft, and riot and civil commotion. You also might be covered against windstorm and hail depending on what area of Texas you live in.

What is the purpose of Texas Fair Plan insurance?

The purpose of the Texas Fair Plan is to provide insurance to high-risk homeowners who’ve been denied coverage by at least two insurance companies on the voluntary insurance market.

Does the Texas FAIR Plan cover water damage?

The Texas FAIR Plan might cover water damage from windstorms, hurricanes, and hail depending on where you live in Texas. If it doesn’t, you can always take out a separate policy through the Texas Windstorm Insurance Association (TWIA) or add a sudden and accidental discharge of water and steam endorsement to your existing policy.

However, the Texas FAIR Plan does not cover water damage due to flooding — you’ll need to take out a separate flood insurance policy for that added protection.

References

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Policygenius uses external sources, including government data, industry studies, and reputable news organizations to supplement proprietary marketplace data and internal expertise. Learn more about how we use and vet external sources as part of oureditorial standards.

  1. Texas FAIR Plan Association

    . "

    Rating Rules

    ." Accessed February 01, 2024.

Authors

Jennifer Gimbel is a senior managing editor and home insurance expert at Policygenius, where she oversees our homeowners insurance coverage. Previously, she was the managing editor at Finder.com and a content strategist at Babble.com.

Pat Howard is a managing editor and licensed home insurance expert at Policygenius, where he specializes in homeowners insurance. His work and expertise has been featured in MarketWatch, Real Simple, Fox Business, VentureBeat, This Old House, Investopedia, Fatherly, Lifehacker, Better Homes & Garden, Property Casualty 360, and elsewhere.

Expert reviewer

Ian Bloom, CFP®, RLP®, is a certified financial planner and a member of the Financial Review Council at Policygenius. Previously, he was a financial advisor at MetLife and MassMutual.

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