What is a FAIR Plan and how do I get one?

With homeowners insurance, you have protection for your home and personal belongings against certain types of loss covered in your policy. But if you live in an area that’s considered “high-risk”, you may have a tougher time getting coverage.

If you’re unable to get home insurance in the voluntary market, or insurance companies refuse to cover certain catastrophic risks that are common in your particular area, you can get insured through your state's Fair Access to Insurance Requirements (FAIR) Plan.

FAIR Plans are typically costlier than standard homeowners insurance and have limited coverage, but they’re a fine last-resort option if you’ve run out of luck with the private insurance market.

How do FAIR Plans work?

FAIR Plans, also known as “shared market plans” or “residual market plans”, are available in select high-risk regions of certain states where private home insurance coverage isn’t always a guarantee. The program, which is mandated by the state but typically funded by private insurance companies, is set up so that multiple insurance companies carry the risk of insuring your home, rather than just one.

Your level of coverage will vary depending on how robust your particular state’s program is, but all FAIR Plans cover property damage due to windstorms, fire, vandalism, and riots. Some state plans include all the coverage you get in a standard home insurance policy, like liability protection and replacement cost reimbursements for your home and personal property. Currently, 28 states and the District of Columbia offer their own version of a FAIR Plan.

In addition to FAIR Plans, seven states on the Atlantic and Gulf coasts also offer Beach and Windstorm Plans, which specifically cover hurricane- and windstorm-related damage to eligible homes on the coast. Windstorm plans in Florida, Mississippi, New York, South Carolina, and Texas offer coverage for wind and hail damage only, while plans in Alabama and North Carolina also cover fire damage.

What constitutes a high-risk home?

As we touched on earlier, if your home is considered high-risk or you live in an area with abnormally high exposure to natural disasters, you may be turned down in the private market. But what do insurance companies generally regard as high-risk? Well, it can be a number of factors, such as:

• If your home is located in an area known for severe weather or natural disasters, like bushfires, hurricanes, windstorms, tornadoes, and hail.

• Your home’s condition. A home with old plumbing and outdated electrical wiring may be deemed too big of a risk for the private insurance market. Certain states’ FAIR Plans won’t even cover a home with obsolete features unless improvements are made.

• You live in an urban area with high crime rates.

• You’ve filed multiple claims and you have a lengthy loss history, in which case private insurance companies may consider you, rather than the home itself, too risky to insure.

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Is there room for negotiation if you’re turned down by private insurers?

Understand that you should only resort to FAIR Plans once all of your other insurance options have been exhausted. In fact, most state’s programs will require proof that you’ve been denied by multiple insurance companies before applying for the government program. Before throwing in the proverbial towel and going right for a FAIR Plan, there’s a few things you should try out first.

Talk to an insurance agent

Your first order of business if you’re turned down should be to ask the insurance company or representative why exactly your home is considered too risky to insure. Is it because of the home’s location, or is it because of its physical condition? They may provide you with a list of fixes or upgrades that can make your home more insurable.

If your claims history is the reason you can’t find home insurance, talk to an agent at Policygenius; we work with a number of insurance companies that don’t factor in $0 losses (claims that didn’t pay out any money).

Talk to your neighbors

Chat with people in your neighborhood and see what insurers they use. You should also ask about other hazards that are specific to the region and see if you need additional protection like flood or earthquake insurance.

Talk to your mortgage company

If you recently bought the home and can’t find coverage, talk with the home seller or your mortgage company to see what insurance company the prior homeowner used.

Talk to your state insurance department

In addition to offering FAIR Plans and Beach and Windstorm Plans, states also have departments that both regulate property insurance and provide educational resources about how to get insurance on the private market.

Check your state’s website, or call your state’s insurance department to get a list of private insurers who write policies in your area.

How to get a FAIR Plan

If you’ve tried every option on the private market and you still can’t find coverage, you can get coverage through your state’s FAIR Plan.

FAIR Plans are typically pretty barren, only covering your home and personal property against “named” perils (the types of loss listed in the policy) as opposed to standard home insurance which covers “all risks” (everything except what is specifically excluded in your policy). Additionally, FAIR Plans generally don’t provide liability or medical payments coverage.

But some coverage is better than none, and a FAIR Plan ultimately provides coverage against common types of loss like fire, wind damage, and theft.

As we mentioned earlier, in order to insure you under a FAIR Plan, your state will need proof that you were denied coverage on the private insurance market. To get a Coastal Market Assistance Plan in New York, for example, you’ll need proof that your home insurance application was rejected by at least three insurance companies.

If your home is at particularly high risk, you may also be required to make improvements or renovations, such as upgrading your plumbing, electrical wiring, HVAC systems, or installing a security system in your home. If you don’t meet the qualifying criteria, the FAIR Plan administrator can deny you coverage.

Once you’re ready to apply for a FAIR Plan, call your state’s insurance department and they’ll provide you with the next steps. You’ll typically be directed toward a private insurance agent who will help you fill out your FAIR plan application.

State FAIR Plan contact information