In the last few years, Central Coast homeowners have increasingly received non-renewal letters from major carriers citing wildfire risk. When that happens, and when other admitted carriers also decline, the last-resort option in California is the FAIR Plan. We’ve placed many of these recently, for clients in SLO County and across California. Here’s how it actually works.
What is the California FAIR Plan?
The FAIR Plan (Fair Access to Insurance Requirements) is a state-mandated insurance pool. Every admitted property insurer in California participates in it. It exists specifically as coverage of last resort for property owners who cannot get coverage in the standard market.
It is not a state agency and it is not government-funded. It is a privately operated insurance pool with state oversight.
What does the California FAIR Plan cover?
A standard FAIR Plan dwelling policy is a basic, named-perils policy. The core covered perils are:
- Fire and lightning
- Internal explosion
- Smoke damage
The FAIR Plan offers some optional coverages for an additional premium, such as vandalism and malicious mischief, and recent reforms have raised the coverage limits available. Even so, the FAIR Plan is intentionally limited compared to a standard homeowners policy. The exact perils on your form will depend on which FAIR Plan policy form you are placed on.
One limit worth knowing up front: the FAIR Plan’s residential dwelling coverage currently tops out at $3 million (commercial property can go higher). A home that would cost more than that to rebuild needs additional coverage layered on top.
What the FAIR Plan does NOT cover
This is the part most homeowners do not realize until after they have the policy:
- No liability coverage. If a guest slips and falls on your property, FAIR Plan does not pay.
- No theft coverage on the basic dwelling form.
- No water damage from most causes (burst pipes, leaks, etc.)
- No falling objects, weight of ice or sleet, or accidental discharge
- Personal property (contents) coverage is not automatic the way it is in a standard homeowners policy; it has to be specifically added, and even then it is named-peril
- Limited or no loss-of-use coverage in the basic form
In practice, a FAIR Plan policy by itself leaves significant gaps that most homeowners would want filled. That’s why FAIR Plan is almost always paired with a wraparound.
What is a DIC policy and why pair it with FAIR Plan?
The standard solution is to layer a Difference in Conditions (DIC) policy on top of your FAIR Plan policy. The DIC policy covers what FAIR Plan does not: liability, water damage, theft, additional living expenses, broader personal property, and more.
Together, FAIR Plan + DIC approximates the coverage of a standard homeowners policy. The total cost is often comparable to (sometimes higher than) a standard market policy would have been, but the standard market may not be available to you anymore. That is why we are talking about FAIR Plan in the first place.
Who qualifies for the FAIR Plan?
To qualify for FAIR Plan, you generally need to have been unable to get coverage in the standard market. Practically, this means we look at multiple admitted carriers’ appetite and confirm that none will write your property. Documentation of declines may be required.
You don’t need to do this hunting yourself. We handle the carrier search as part of the process.
What should you do if you get a non-renewal letter?
Don’t panic. Don’t assume FAIR Plan is your only option. Carrier appetite in California has been shifting almost month by month. A property that was non-renewable last year might be writable in the standard market this year, and vice versa.
Steps that work for most situations:
- Contact us as soon as the letter arrives. Time matters because California law requires at least 75 days notice of a non-renewal on a residential property policy, and you’ll want options long before that runs out.
- We try Farmers first if they’re not the carrier non-renewing you. If Farmers can write it, you stay in the admitted market and avoid FAIR Plan entirely. If Farmers can’t (or is the carrier non-renewing you), we look to brokered admitted carriers that can write it.
- If standard market doesn’t fit, we move to FAIR Plan + DIC. We handle both placements as a single conversation, coordinated to fill the right gaps.
- We re-evaluate annually. If standard market appetite improves for your property type or area, we’ll move you back when it makes sense. Being on FAIR Plan is not a permanent state.
Why working with an agent who knows this matters
The FAIR Plan + DIC combination is more complex than a standard policy. The two policies have to talk to each other. Coverage gaps between them are easy to miss if you’re working with an agent who does not place these regularly.
This is part of our brokered carrier capability. Many of our SLO County clients are on FAIR Plan + DIC because of wildfire exposure. We’ve placed enough of these that we know where the gaps tend to show up, what each policy form actually covers, and how to coordinate the two so a claim later doesn’t fall in the seam between them.
If you’re staring at a non-renewal letter, get a quote or book a call. Faster is better.
If you’re shopping for a new home in SLO County and worried the property might land you in this situation, our home buyer’s insurance check guide walks through how to vet a property’s insurability before you make an offer.
One detail worth knowing once you’re on the FAIR Plan: the age of your roof can change how a dwelling claim is settled. Our explainer on roof age and FAIR Plan coverage covers why 25 years is the number that matters.