CA FAIR Plan
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CA FAIR Plan
Homeowner’s insurance can be difficult for California residents but for some, they will need to turn to California’s high-risk program also known as the Fair Plan.
After the Paradise fire in 2018 with estimated total damage at $16.5 billion and about one-quarter of the damage was not insured. The result caused the insurance industry to take on huge losses and now rushing to reduce their exposure to wildfires many insureds started receiving non-renewals with no insurance companies to cover them.
CA Fair Plan has always been there for insureds with too many claims or hard-to-place locations that were far too risky for a traditional insurance carrier to insure.
With CA Fair Plan Homeowners were now able to have an option, However CA Fair plan has many limitations.
What does a California FAIR Plan policy cover?
The FAIR Plan covers property damage due to fire, lightning, smoke, or internal explosions. You can also purchase optional extended coverage for windstorms, hail, explosions, riots, aircraft, or vehicles, as well as for vandalism or malicious mischief. You can also get optional coverage for other structures, like storage sheds.
It does cover less than traditional homeowners’ insurance policies. For example, the FAIR Plan does not offer coverage for theft, falling objects, freezing, water damage, or personal liability.
This meant that if you bought the FAIR plan, you also needed to buy a Difference in Conditions (DIC) or Comprehensive Premises Liability (CPL) policy through another company to add additional coverage.
Who owns the California FAIR Plan?
While many people believe the FAIR Plan is a government entity or state program because it was created by the Governor and Legislature, this is not the case. Taxpayers do not fund the program. The FAIR Plan is a private association whose operation is controlled by a syndicated fire insurance pool comprised of all insurers licensed to conduct property/casualty business in California.
The FAIR Plan is a temporary solution
In the last decade, more Californians have turned to the FAIR Plan as wildfires have devastated California and some insurers have pulled back from these markets. Fair Plan was meant to be a temporary safety net until coverage are offered by a traditional carrier.
Coverage Options Available Through the FAIR Plan:
Below are some of the coverages allowed with CA Fair Plan. We highly recommend that you make sure you get the right coverage to ensure you are properly covered!
Dwelling: That covers the rebuild of your home and anything attached to the structure.
Personal Property: All your belongings inside the home. Replacement cost is available.
Other Structures: Those are detached structures. Barns, Detached Garage, Sheds.
Fair Rental Value: Gives you money to live elsewhere if you can't live in the home because of smoke or fire damage.
Ordinance or Law: This would cover any building code upgrades needed to the home up to your policy limits.
Debris Removal: Gives you money to haul away debris damaged by a covered loss.
Fences: Covers your fences.
Plants, Shrubs, and Trees: Gives you money to replace landscaping if damaged by a covered loss.
Awnings: If you have a roll-away awning or decorative awning it would help replace them in the event of fire. You can also add coverage for wind and hail damage.Permitted Incidental Occupancy: If you have a home business and you use equipment for that business this would give you additional coverage.
You also have the option to add two endorsem*nts:
ECE: Extended Coverage, includes coverage for loss caused by wind or hail, explosion, riot or civil commotion, aircraft or Vehicle damage and Volcanic Eruption.
VMM: Adds coverage for Vandalism and Mischief.
What to expect if you are in need of CA FAIR plan
CA FAIR Plan has recently added additional requirements prior to purchasing a policy
Digital Photos Requirements:
Photos must include a time-stamped digital photo of the property/risk no later than 5 days before the date of submission of the application. The photo should include the entire front view of the risk with the address number seen. If the address number is not visible in the picture of the entire front, then a second picture showing the address number should be included. A picture of the front of the building as well as a picture of the mailbox showing the street number should be included with the application. A photo of each building for which coverage is being requested must be included with the application.
(Listing photos are not acceptable unless they are stamped within the last 5 days)
Also to note:
All locations will be require an inspection once the policy is in effect. Also the earliest effective date of coverage for a new business policy is one day after the date the payment is received by the FAIR Plan. Therefore, any web payment with a request for evidence of insurance must be received at least one (1) day before the escrow closing date for that date to be honored as the effective date.
If your escrow date changes, and you request to modify your effective date, the FAIR Plan cannot change the effective date of a new business policy to a date later than the expiration date of the initial quotation or to a date any earlier than one (1) day after receipt of payment. The effective date change is usually processed within 24 -48 hours.
We are always here to help so if there is any questions you may have contact one of our specialist today.
