In recent years, many California homeowners have struggled to find home insurance. Between wildfire risks and private insurance companies scaling back coverage in high-risk areas, some properties have become nearly “uninsurable.” That’s where the California FAIR Plan comes into play. The FAIR Plan (Fair Access to Insurance Requirements) is California’s state-mandated insurance plan, created to provide basic fire insurance coverage to homeowners who can’t get it through other insurance companies.
It’s not a government-funded program but rather a shared market among private insurance companies operating in the state. Every insurer licensed in California participates in and contributes to the plan’s funding, ensuring that high-risk properties have coverage.
Why this is important
Many areas of California—especially those close to canyons, forests, or brush—are now classified as high fire-risk zones. Most of the major insurance carriers have stopped writing new policies or significantly increased their rates in areas located where there is high fire risk.
Without the FAIR Plan, homeowners in these zones might be left without coverage, which poses major issues when:
- Obtaining a mortgage: Lenders require proof of hazard insurance before closing a loan.
- Protecting a home investment: Without coverage, homeowners risk severe financial loss from fire damage.
What it covers (and what it doesn’t)
The FAIR Plan covers fire, lightning, smoke, and internal explosion damage. However, it’s limited compared to standard homeowners’ policies. It does not cover things like:
- Theft or vandalism
- Water damage
- Liability protection
Homeowners can add a Difference in Conditions (DIC) policy, which works alongside the FAIR Plan to provide broader protection—similar to a standard homeowner’s policy.
The Bottom Line
The California FAIR Plan isn’t designed to replace private insurance—it’s a temporary solution for homeowners who can’t find coverage elsewhere.
If you have questions, please contact our office at (760) 930-0569 to speak with one of our Mortgage Loan Originators.
