The FAIR Plan, and the coverages that are not in it

The California FAIR Plan is the option people reach for when the ordinary market has run out. Fair Access to Insurance Requirements is what the initials stand for, and the Department of Insurance describes the Plan as an association of all property insurers licensed to conduct business in California, designed to make property insurance more readily available to people who have difficulty obtaining it from private insurers because their property is considered “high risk.” It is available to California residents and businesses in urban and rural areas who cannot obtain insurance through a regular insurance company.

Who actually runs it

The Department is direct about who controls the Plan: while created by the Governor and Legislature, the FAIR Plan is a private association whose day-to-day operations are controlled by insurance companies, not taxpayers. The Department exercises oversight under California law to make sure the Plan addresses the changing needs of Californians. The Department’s first recommendation is to shop the market; if after that you are still having difficulty obtaining insurance, you may apply for coverage through an agent or broker licensed to sell property insurance.

What the standard policy is, and what it is not

This is the paragraph that matters most, and the Department writes it without softening. The FAIR Plan offers a standard fire insurance policy for both the structure and contents. This is a basic property policy that has coverage limitations. No coverage is provided for liability or coverage for other perils such as burglary. A household moving from a homeowners policy to a FAIR Plan policy is therefore not swapping one contract for a similar one; it is keeping the fire cover and losing several other things at once, including the section that answers when somebody is injured on the property.

The Department’s own summary, published when a court upheld the Commissioner’s order to expand the Plan, puts the trade in one sentence: the FAIR Plan is California’s “insurer of last resort,” offering a bare-bones residential policy that covers fire and smoke damage but forces homeowners to purchase an additional policy at an increased cost to have coverage for liability, water damage, and other common perils.

The difference in conditions policy

That additional policy has a name. FAIR Plan policyholders who want the missing coverage must purchase a separate difference in conditions policy offered by a private insurance company — a second contract, from a second insurer, bought separately. The gap it fills is not hypothetical: the Department notes on its flood pages that the California FAIR Plan currently does not cover any storm-related damage unless a consumer has purchased a supplemental difference in conditions policy from another insurance company. Anyone treating a FAIR Plan policy as a complete residential policy is uninsured for a list of losses they may never have thought about.

What changed in November 2023

The Department’s news release of November 29, 2023, headed “Court delivers win for homeowners in expanding FAIR Plan coverage,” recorded a state judge supporting the Commissioner’s order that the Plan offer homeowners a more comprehensive policy option. The release lists the additional coverages the order reaches: accidental discharge or overflow of water or steam; premises liability; incidental workers’ compensation; theft; falling objects; weight of ice, snow, or sleet; freezing; and loss of use, including additional living expenses and fair rental value. Those are typically included in a standard comprehensive homeowners policy, the Department says, but not offered under the Plan’s limited fire policy. The Department has described the comprehensive residential policy option as in progress. What any individual policy contains today is a question for the Plan and the broker placing it, not for a web page.

Two practical points before you apply

The first is a discount. Residential policyholders can obtain a discount on the wildfire portion of their FAIR Plan premium for hardening their properties, and the Department directs people to the Plan itself for the detail. The second is a fee you should not be charged at all: it is illegal or improper for an insurance broker to charge you a fee for placing coverage solely with the California Automobile Assigned Risk Plan or the California FAIR Plan, although fees may be charged for placement of other coverages. A broker fee agreement should never be signed with blank lines still in it.

Why this page sits next to the liability guide

Because the liability gap is the part that surprises people. A homeowners policy carries Coverage E, and the Department describes it as providing cover where you or a resident of your household are legally responsible for injury to others. The standard FAIR Plan policy does not include that at all. If a Palmdale household ends up on the FAIR Plan for wildfire reasons, the question of who answers for an injury on the property has to be asked again from the beginning.