Understanding California FAIR Plan insurance: Coverage, limits & alternatives

If you’re a California homeowner shopping for home insurance, you might have come across the California FAIR Plan. The FAIR Plan, which stands for Fair Access to Insurance Requirements, is a state-mandated program that insures California homeowners who have been refused coverage on the private insurance marketplace. But the California FAIR Plan isn’t right for everyone — it’s a last-resort option for homeowners who can’t get home insurance anywhere else.

What is a California FAIR Plan?

A California FAIR Plan is a type of home insurance policy that’s available through the state’s FAIR Plan Association. It provides basic fire coverage to California homeowners who aren’t able to get home insurance through a private insurance company due to factors like wildfire risks.

The California FAIR Plan was created in 1968 to give all homeowners fair access to home insurance, even if private insurance companies won’t assume the risks of insuring their properties. FAIR Plans also satisfy most mortgage lender requirements for insurance.

Who is eligible for coverage?

Not all homeowners are eligible for the California FAIR Plan. Here are the requirements you must meet to qualify:

• Must own or rent a property in California (includes single-family homes, condos, rental properties, and manufactured homes).

• Show proof that you’ve been unable to find home insurance coverage in the traditional market.

• Property must meet certain building codes.

So, who’s not eligible for the FAIR Plan? Any California homeowner who is able to get home insurance on the voluntary marketplace is not a candidate, even if their home is high-risk. Additionally, the FAIR Plan won’t cover homes that are vacant for more than 50% of the year or have extensive damage that hasn’t been repaired. 

What do California FAIR Plans cover?

The California FAIR plan covers your dwelling (the physical structure of your home) and attached structures, with a maximum coverage limit of $3 million per property. It provides coverage against these named perils:

• Fire

• Lightning

• Smoke

• Internal explosions

California homeowners can also add several endorsements for more protection. For example, the optional extended coverage plan provides financial protection for the following perils:

• Windstorm and hail

• External explosions

• Riots and civil commotion

• Aircraft and cars

• Volcanic eruptions

There’s also an option to add protection against vandalism and mischief. It is also important to note that you can typically add optional coverage for Other Structures (like a detached garage) and Personal Property (your belongings).

Because FAIR Plan insurance has limited coverage, homeowners can fill the gaps by adding Difference in Conditions (DIC) policies. These policies can provide coverage for perils not covered by the FAIR Plan (like theft and water damage), as well as additional coverage, like liability and additional living expenses.

The FAIR Plan doesn’t underwrite insurance policies, so it doesn’t offer DIC policies directly. If you’re interested in adding a DIC to your FAIR Plan policy, you can view a list of insurers in California that sell DIC policies.

What isn’t covered by a California Fair Plan?

A standard California FAIR Plan provides very limited coverage, which is why it’s considered a last-resort option for homeowners. For example, the basic FAIR Plan doesn’t include coverage for:

• Personal liability (bodily injury or property damage to others)

• Additional living expenses (if you are displaced from your home)

• Theft

• Water damage (from burst pipes, etc.)

Coverage for personal belongings and detached structures is also not part of the basic plan, but can typically be added as an optional endorsement.

Additionally, the list of covered perils is much smaller than what a private home insurance policy would provide. Here are some losses that are excluded under a basic California FAIR Plan:

• Theft

• Falling objects

• Water damage

• Windstorms (can be added via endorsement)

• Hail (can be added via endorsement)

• Riots (can be added via endorsement)

A California FAIR Plan also excludes coverage for flooding and earthquakes, which aren’t covered under most private home insurance policies. If you want coverage for floods or earthquakes, you may be able to add a Difference In Conditions policy (DIC), or purchase standalone flood insurance or earthquake insurance policies.

How FAIR Plan coverage works

If you think that you’re eligible for the California FAIR Plan, you can apply through a broker. Here are the steps you should follow to get FAIR Plan coverage:

1. Contact a broker: The first step is to contact a licensed California insurance broker that works with the FAIR Plan. A broker can explain your options, and potentially, help you find better coverage than what the FAIR Plan can provide. If FAIR Plan insurance is your best option, a broker can assist with your application.

2. Calculate the cost of replacing your home: Next, you’ll need to estimate the replacement cost value of your home based on the local building costs. Keep in mind that your home’s replacement cost is not the same as the fair market value. A broker can help you calculate the cost of rebuilding, labor, and materials. 

3. Submit an application: The application process is similar to private home insurance. You’ll need to provide details about your home, including the age, square footage, roof type, and any recent renovations. You’ll also have to provide photos of your home from all four sides. 

4. Get a home inspection: Most homeowners will need a home inspection as part of the FAIR Plan application process. An inspection can determine whether the property is insurable, and how much risk the insurance company will assume to insure the property.

5. Get a quote and buy the policy: The final step is to get a quote and decide whether you want to add any FAIR Plan endorsements (like for personal property or wind) or a separate DIC policy.

If you have a covered loss, you can file a claim to get reimbursed. Homeowners can submit a claim online or call the FAIR Plan during business hours at 1-800-339-4099. You’re required to report a covered loss to the FAIR Plan promptly, otherwise, the claim may be delayed or denied.

Limitations of FAIR Plans

The California FAIR Plan has a number of limitations compared to private home insurance. Here are some of the biggest ones to know about:

• Limited coverage: A basic California FAIR Plan only provides fire coverage for your dwelling, and it only covers a handful of perils. Unless you add endorsements and DIC policies, it won’t cover many of the other risks that homeowners can face, like theft or liability. 

• Residential dwelling coverage caps: The California FAIR Plan has a maximum dwelling coverage limit of $3 million per location. If you own a high-value home that would cost more than $3 million to rebuild after a total loss, you would likely have to make up the cost differently out of pocket.

• Rates could be increasing: FAIR Plan insurance is typically more expensive than private insurance, and top of that, rates in California may be increasing. The California FAIR Plan could raise premiums by an average of 35.8% starting in early 2026. Roughly half of current FAIR Plan customers would see a cost increase of between 40% and 55%.

Fair Plan vs. private insurers

FAIR Plan insurance differs from private home insurance in a number of ways.

The California FAIR Plan is a state-mandated pool, and it’s funded by licensed and admitted insurance carriers in California. Private insurance companies, on the other hand, are able to fund and underwrite their own home insurance policies.

California homeowners are only eligible for FAIR Plan insurance if they’ve been unable to find home insurance coverage in the private market. If you can get insured on your own, you don’t qualify for FAIR Plan insurance. 

In terms of coverage, private home insurance companies provide much better financial protection. Standard private homeowners insurance policies cover your dwelling, personal property, liability, and additional living expenses. FAIR Plan insurance in its most basic form only covers your dwelling, and you must add FAIR Plan endorsements or separate DIC policies to fill coverage gaps.

On the subject of coverage, private home insurance policies provide coverage for many more perils than FAIR Plan insurance does. Remember—a basic FAIR Plan only covers fire, lightning, smoke, and internal explosions. It doesn't cover things like theft, water damage from pipes, or falling objects. Perils like wind, hail, vandalism, and riots require separate, optional endorsements, which a standard home insurance policy will typically cover.

Cost is another differentiator between these two home insurance options. As mentioned, FAIR Plan home insurance is usually more expensive than private home insurance. And if you add endorsements and DIC policies, it will raise your premium even more.

If you’re not able to get private home insurance, and you’re looking for options besides FAIR Plan insurance, you might be a good candidate for excess and surplus (E&S) insurance. E&S insurance is a special type of insurance that can insure high-risk properties.

E&S insurance providers have different requirements than admitted insurers, so it can be easier to qualify for coverage through an E&S insurance company. But like FAIR Plan insurance, E&S insurance policies tend to have very high premiums.