Fair Plan Home Insurance Last Resort Option
FAIR Plan Insurance
Home insurance plays a vital role in the financial stability of a homeowner. Unfortunately, many people get turned down for coverage due to certain risk factors involving their home or themselves. When this occurs, purchasing FAIR Plan Insurance may be an option.

Table of Contents

What Are FAIR Plans?
A FAIR Plan is the homeowners insurance coverage of last resort. The FAIR Plan, short for Fair Access to Insurance Requirements, provides basic property and home insurance to high-risk homeowners that have trouble obtaining home insurance through the voluntary market. They are also referred to as shared market plans and residual market plans and are available in twenty-eight states as well as the District of Columbia.

FAIR Plans are state-mandated but get funded through private insurance companies who join each state's non-profit FAIR Plan's association. Typically, each home insurance company that provides coverage in a state's private market is required to participate in that state's FAIR Plan.

When the insured needs to file claims, the risks and costs get spread among all insurance companies in the FAIR plan association. This pooling of risks prevents one insurance company from taking on all the losses, which can quickly add up in high-risk areas, such as wildfire-prone areas and tornado alley.

tornado GIF

What is High-Risk Homeowners Insurance?
An insurance company may consider a home too risky to insure if the house or the homeowner meets specific criteria.

The Home

  • Location. The location of your house is one of the most significant determining factors. If the house is in a high crime rate area, it is usually considered too risky for those in the private insurance market. Additionally, if it is in an area prone to severe weather and natural disasters, you will likely be denied a standard homeowner insurance policy.
     
  • Usage. Homes are sometimes viewed as high risk if they are not used consistently, such as vacation homes. Since they sit empty often, they are more vulnerable to break-ins and damages due to a lack of maintenance.
     
  • Current Condition. It is difficult to get a standard homeowner insurance policy if the home is in poor condition, as this makes them more vulnerable to additional damages. It also increases the likelihood that you will file a claim. Therefore, most insurance companies will turn you down.

The Homeowner

  • Prior Claims. Past behavior is often a tell of future behavior. When a homeowner has a history full of insurance claims from their current home or another, it appears to be too risky to insure them. If you have filed many claims in the past, the private insurance companies often view you as high risk.
     
  • Low Credit Score. Even a homeowner's credit score can impact how an insurance agency views them. Low credit scores seem to be a sign of irresponsibility and, therefore, risky behavior. While not all insurance agencies check credit, some do.

What Do FAIR Plans Cover?
All FAIR Insurances covers losses to your home and personal property that are caused by:

  • Fire
  • Vandalism
  • Riots
  • Windstorms (plus plan)

Some states provide additional protections according to the specific risks that the area faces. For instance, California FAIR Plans include coverage for brush fires, and New York and Georgia's FAIR Plans extend coverage for wind and hail.

Some policies also include liability and valuation methods using replacement cost reimbursements for your home.

While they do provide these basic protections, that is usually the extent. FAIR Plans are not comprehensive plans but bare-bones plans. They provide the homeowner with basic coverage, but it is enough to satisfy mortgage lenders' insurance requirements.

If you need additional homeowners coverage, you can purchase a Difference in Conditions, or DIC, policy. This separate policy allows you to extend your coverage for perils such as water damage, falling trees, and other events not covered by the FAIR Plan. You can work with your insurance agent or broker to determine the best protection for your family and home.

Alternatives to FAIR Plan Insurance
As an alternative to FAIR Plans, seven Gulf and Atlantic coast states provide beach and windstorm plans that cover damages caused by strong winds and hurricanes. North Carolina and Alabama offer windstorm and fire coverage, while Mississippi, South Carolina, Florida, Texas, and New York provide only wind and hail damage coverage.

Non-admitted insurance policies are also an option. These specialty insurers handle high-risk people, homes, and neighborhoods and offer plans that could suit your needs.

Standard homeowners insurance nor the FAIR Plans cover flooding; however, you can get flood insurance through the National Flood Insurance Program, or NFIP.
 
How Much Does FAIR Plan Insurance Cost?
The cost of a FAIR Plan depends on:

  • The state
  • The risk factors of the applicant and their home

Regardless, you can expect the FAIR Plan to be more expensive than a standard homeowners insurance policy.
 
FAIR Plan Claims
When you have a FAIR Plan and need to file a claim, it is best to both inform your insurance agent and submit it through your state's FAIR Plan website. If you have difficulty finding the site, your state insurance department can point you in the right direction.
 
When to Get a FAIR Plan
FAIR Plans are considerably basic coverage that typically cost more than standard policies, so they should be your last option. First, apply through insurance companies in the voluntary market. If you get denied for coverage, find out exactly why.

Sometimes, what prevents you from obtaining insurance can be fixed with some home improvements or by agreeing to a higher deductible. If you get denied, fix what is necessary, then reapply in the voluntary market.

Try to get approved for a standard homeowners policy, even if you must get denied several times, before applying to a FAIR Plan. Most states require documentation of denial, and some require a certain number of rejections before you can qualify. Therefore, be sure to know your state's specific requirements and keep any denial letters that you receive.
 
How to Get a FAIR Plan
If you are unable to obtain homeowners insurance coverage through a standard policy, you can contact your state insurance department for help. Also, try an insurance broker who can direct you to one or more insurance providers who participate in the FAIR Plan. We can help you with your California FAIR Plan.

In some cases, your state FAIR Plan may ask you to install alarm devices and anti-theft systems, or water backup valves. Sometimes, making repairs will help you get qualified. Fixing your roof, upgrading your wiring, plumbing, and appliances could also help. These changes may even qualify you for a standard homeowners insurance policy with these upgrades; if you make upgrades, check with a private insurer before buying a FAIR Plan.

Who Is Eligible for a FAIR Plan?
Not everyone who applies for a FAIR Plan will get approved. To be eligible, you must have been denied coverage by private insurers. The number of denials required varies by state.

Once you have applied, a FAIR Plan inspector will come to inspect your property. Before you get coverage, you may be required to make some improvements to your home. These improvements include steps to help reduce the risk of water damage, fire, and theft. If you fail to complete the requirements by the given deadline, FAIR can deny insurance coverage for your home.
 
Get a FAIR Plan Quote
Do not leave your home unprotected. Get an online quote for homeowners insurance today - if you are out of options - you may get quotes from the FAIR Plan.

Get an Online Homeowners Insurance Quote

At your service,
Young Alfred