What is the Texas FAIR Plan for homeowners?

The Texas FAIR Plan is a state-run insurer of last resort for homeowners who can't find coverage on the private market. FAIR Plan home insurance isn’t sold by private insurance companies. Policies are issued by the Texas FAIR Plan Association (TFPA) and administered by the Texas Windstorm Insurance Association (TWIA). The Texas FAIR Plan was rolled out in 2002 after many homeowners struggled to find private companies to insure their homes.

How the Texas FAIR Plan works

The TFPA isn’t a state agency. It’s managed by the TWIA and funded by assessments on Texas insurance companies and policyholder premiums. Every insurance provider that sells property coverage in Texas belongs to the TFPA and contributes to the cost of operating the Texas FAIR Plan program.

To get Texas FAIR Plan homeowners insurance, you must meet the following requirements:

• Denied coverage: You must prove that you’ve been denied coverage by at least two insurance companies licensed in Texas and have no alternative options. Homeowners with active property insurance policies or renewal offers are not eligible. 

• Property condition: The home must be occupied, with no significant damage or safety hazards, and no unusual liability exposure, like a pool without a fence.

• Claim history: Applicants must have no more than eight paid home insurance claims (except glass claims) within the three years prior to applying.

• Insurance record: You aren’t eligible for the Texas FAIR Plan if you’ve been convicted of arson, fraud, or similar insurance offenses.

Home insurance through the Texas FAIR Plan is a last resort option. Policyholders are required to reapply for home insurance on the voluntary market every two years to remain eligible.

What the Texas FAIR Plan covers

The TFPA offers a homeowners policy, dwelling policy, condo policy, and renters policy. Each policy covers a specific list of named causes of loss, called perils. Texas FAIR Plan policies typically cover the following:

• Fire

• Lightning

• Smoke

• Wind and hail (in certain locations)

• Explosions

• Damage from airplanes and vehicles

• Riots and civil unrest

• Vandalism

• Theft

Your dwelling, detached structures, and personal property are covered at their actual cash value (ACV), which is the replacement cost minus depreciation. Eligible policyholders have the option to add replacement cost value (RCV) for an added cost, which provides a higher payout that pays to replace the item with a comparable model at today’s prices, regardless of depreciation or wear. 

Texas FAIR Plan coverage limits depend on the type of policy purchased. Here’s how much coverage you can get with a homeowners policy:

• Dwelling: Up to $1 million

• Other structures: 10% of the dwelling limit

• Personal property: 50%, 60%, or 70% of the dwelling limit

• Personal liability: $100,000 or $300,000 

• Medical payments: $5,000 limit per person and $25,000 per occurrence

• Loss of use: 10% of the dwelling limit

The chart below shows coverage types and limits based on the type of FAIR Plan policy.

What the Texas FAIR Plan doesn't cover

Because Texas FAIR Plan policies only cover named perils, some of the losses that are normally covered under a standard home insurance policy are excluded, such as falling objects, the weight of snow and ice, and sudden and accidental water damage.

Wind and hail are two of the most notable exclusions in the FAIR Plan. The TFPA doesn't cover wind or hail damage in the state's 14 first-tier coastal counties, which include:

• Aransas

• Brazoria

• Calhoun

• Cameron

• Chambers

• Galveston

• Jefferson

• Kenedy

• Kleberg

• Matagorda

• Nueces

• Refugio

• San Patricio

• Willacy

• Harris County (east of Highway 146 only)

If you live in one of these counties, you’ll need to get a separate TWIA windstorm policy. Like the Texas FAIR Plan, you must meet certain eligibility requirements to get windstorm insurance through the TWIA.

The other major gap in coverage is flooding, which is typically excluded under all homeowners insurance policies in Texas. If you want coverage for flood damage, you can purchase flood insurance from a private insurer or the National Flood Insurance Program (NFIP).

How to apply for a Texas FAIR Plan policy

The TFPA doesn’t sell FAIR Plan policies directly to homeowners. If you think you’re eligible for a policy, you’ll need to apply through a licensed Texas insurance agent. Here are the general steps to follow to get a Texas FAIR Plan policy:

1. Get two declination letters: Provide proof that you’ve been declined coverage by at least two home insurance companies that are licensed in Texas.

2. Find an insurance agent: Locate a licensed agent who's authorized to submit applications to the TFPA.

3. Submit your application: Your agent will submit your application to the TFPA, along with your declination letters and property information.

4. Complete the underwriting review: The TFPA will review your application, claim history, and property condition before issuing a policy.

Is the Texas FAIR Plan a good option?

If you don’t have any options for private home insurance, the Texas FAIR Plan can be an appropriate choice. It keeps your home insured when you’re unable to find coverage anywhere else. But it’s a last resort option for high-risk homes. 

When considering the Texas FAIR Plan, it’s important to weigh the coverage gaps against the cost of coverage. FAIR Plan policies provide limited coverage compared to private policies, and they usually cost more. With that being said, it’s likely a better option than forgoing home insurance altogether.

The TFPA requires policyholders to shop the private market at least every two years, but it can be worth it to shop more frequently to see if you can qualify for standard coverage. 

Frequently asked questions

What is a Texas FAIR Plan policy?

A Texas FAIR Plan home insurance policy is a property insurance policy issued by the Texas FAIR Plan Association (TFPA). It’s a last-resort option for Texas homeowners who can't find coverage through a standard private insurance company.

What does the FAIR Plan not cover?

FAIR Plan policies exclude flood damage statewide and wind/hail damage in the 14 first-tier coastal counties and part of Harris County. It also doesn’t cover some perils that standard home insurance policies include, like frozen pipes.

Is Texas FAIR Plan a good insurance company?

The Texas FAIR Plan serves its purpose as an insurer of last resort for otherwise uninsurable homes, but it’s not designed to compete with standard insurance companies on cost or coverage. If you don’t have any private coverage options, or your policy has been canceled or nonrenewed, the FAIR Plan could be the right solution for you. 

Is FAIR Plan insurance good?

Many states operate a FAIR Plan for homeowners who are unable to find private insurance. Whether a FAIR Plan is a good option depends on whether you have any private market alternatives that would offer more robust financial protection.