Traditional insurance companies may deny you insurance, especially in California Wildland Urban Interface (WUI) areas known as high fire risk zones.
Under normal circumstances, homeowners can choose a variety of insurance companies and premiums at affordable prices, however, disasters and other economic pressures cause insurers to drop customers at renewal time and stop offering new policies in a regions or neighborhoods they feel are high risk. Fortunately, California has a cure for this situation known as the California Fair Plan.
Tell Me More About the California Fair Plan
The California FAIR Plan Association (FAIR Plan) is an option for people to insure their home when they have been unable to find a company willing to sell them a standard policy.
A FAIR Plan policy protects your home for the risk of fire, and will satisfy a mortgage company’s requirement that your home be insured, but it doesn’t cover theft, flood, earthquake, hail, vandalism or personal liability
How do I qualify for a California Fair Plan?
Any person that has made an unsuccessful effort to buy home insurance can apply to the FAIR Plan to insure their home with a basic dwelling policy. As long as the property meets minimal underwriting standards, FAIR Plan will insure the home, even if it is in a high-risk wildfire area. You will probably have to clear fire fuels, hazards and weeds from your property to fulfill the Fair Plan requirements.
How does the Fair Plan treat dwelling and contents coverage ?
FAIR Plan basic dwelling policies are VERY streamlined. A FAIR Plan policy only covers losses to a dwelling and its contents caused by:
You can buy windstorm, hail, and vandalism coverage from the FAIR Plan as optional additional protection.
Will the California fair plan cost me a lot more?
The answer depends on which FAIR Plan options you choose, and whether you also buy a policy that supplements what a FAIR Plan policy covers. Policies that supplement what the FAIR Plan covers are called “Difference in Conditions” (DIC) policies, see below.
If you buy a FAIR Plan policy plus a DIC policy, it’s probable that the combination will cost more than the price of a standard home insurance policy with similar protection, but you may be unable to buy any other policy. You may have to use the Fair Plan temporarily.
After you buy a FAIR Plan policy, continue shopping in the private market as often as you can. The home insurance marketplace changes, so it’s worth continuing to search for a package policy that covers more than just fire, smoke, and explosion.
In addition to the large and well-known insurers, you may be able to find an affordable policy outside the FAIR Plan through a lesser-known provider. Ask your broker what is available.
Does the Fair Plan include Replacement Cost coverage?
There are limits to the replacement cost coverages. Currently FAIR Plan will only insure you for $3 million total, including your dwelling, contents, and all other coverages
You can pay extra for FAIR Plan Dwelling Replacement Cost coverage. If you do not purchase FAIR Plan Dwelling Replacement Cost coverage and your home gets damaged or destroyed, you will only collect benefits for the Actual Cash Value of the dwelling at the time of the loss.
ACV is computed by subtracting depreciation from replacement cost. Depreciation is figured by establishing an expected lifetime of an item and determining what percentage of that life remains. This percentage, is then multiplied by the replacement cost,
Will The FAIR Plan offer liability coverage like the standard home insurance policy?
No. The FAIR Plan does not cover “personal liability,” “medical payments to others,” or “damage to property of others.” You will have to add liability from another company, and you can tailor your policy in order to do this.
Does the FAIR Plan cover temporary rent, due to not being able to live in my home?
Yes the FAIR plan covers rent but ONLY RENT which is for a place similar to your home up to a dollar limit equal to 10% of your FAIR Plan dwelling limit, unless you buy upgraded coverage of 20%. It does NOT cover mileage, pet boarding, meals, furniture rentals, etc. unlike “Loss of Use” or Additional Living Expense payments in a standard package policy.
How can I make the Fair Plan affordable?
- CUSTOMIZE your plan policy with your agent by buying the best coverage options they offer and you can afford.
- Try to get two quotes for buying a “Difference in Conditions” policy (DIC) that supplements what the FAIR Plan policy provides. DIC policies are not required by mortgage or loan companies, however, buy one if you can afford it.
Difference in Conditions (DIC) Policies
A DIC policy is type of insurance product that supplements or fills in gaps between what a FAIR Plan policy covers and what a standard home insurance policy covers. You don’t need a DIC If you have a standard home insurance policy. A DIC policy can be purchased to provide coverage for perils such as theft, water damage and liability protection
In California’s challenging home insurance marketplace, more and more homeowners need a DIC policy. More and more insurers are offering DIC options, and consumers and insurance professionals are getting more familiar with them.
How can I find a DIC policy?
Contact a professional insurance agent or broker or by shop for them yourself. The California Department of Insurance offers a list of insurers that sell DIC policies here. It’s best to work with an agent or broker who is very familiar with the policies available. He can save you time and money and should be able to help you understand the policies.
What should I look for when purchasing a DIC policy?
Ask plenty of question about the Perils and their definitions as well as understanding how exclusions are defined. Each company has their own definitions.
The brokers at Mark Trumm can answer all your questions. Get started with the California Fair Plan or add a DIC policy by calling us
(530) 534-4600 or completing this form HERE. We’re ready and waiting to help you!