Important information you need to know about the California Fair Plan.

Today, we’re going to discuss an important topic for Californians: home insurance and the California Fair Plan. If you’re a resident of California, especially in a high-risk fire area, this information is crucial.

Several factors can influence a homeowner’s ability to purchase insurance in California. For example, if a house is owned or located near an earthquake fault line, it may be denied coverage due to an elevated risk of damage. Additionally, in 2023, several major insurance companies announced paused or canceled policies in the state due to increasing wildfire risk.

The California Fair Plan, founded in 1968, is a program that provides property insurance coverage to homeowners who have been denied coverage through the traditional market. While it is not an insurance company, it acts as a last resort for homeowners who have been turned down by traditional insurers due to the high-risk nature of their properties.

The Fair Plan offers basic property insurance coverage for fire, smoke, and other perils. It covers the structure of your home, personal property, and additional living expenses in the event of a covered loss related to fire, lightning, smoke, or internal explosions.

It’s necessary to remember that the Fair Plan’s coverage is limited and excludes certain perils that are often covered by comprehensive homeowners insurance policies. For example, it does not offer coverage for theft, falling objects, freezing water damage, or personal liability. Optional extended coverage can be purchased for perils such as windstorms, hail, explosions, riots, aircraft or vehicles, vandalism, or malicious mischief.

“The Fair Plan should be considered a last resort option. ”

To qualify for the Fair Plan, homeowners may have to make improvements to their homes that will limit their risk of damage. This could include removing dangerous trees, upgrading electrical wiring, and making other changes as directed by the insurance company. It’s important to remember that the Fair Plan is available to people who can’t find coverage through no fault of their own. If the necessary changes are not made, the Fair Plan can still deny coverage.

To apply for Fair Plan coverage, it is recommended to first try to obtain coverage on the private market. The Fair Plan should be considered a last-resort option. If traditional coverage is not available, homeowners can find a California Fair Plan broker to assist them in the application process. The broker can help review coverage options, submit the application, and guide homeowners through the process. A credit check and a home inspection may be required. Once the application is approved and the first payment is made, the Fair Plan coverage goes into effect.

The California Fair Plan serves as an essential safety net for homeowners in high-risk areas. While it may not be the first choice, it provides a viable option when all else fails. It’s important to explore traditional insurance options first, as they often offer better coverage at more affordable rates. If you have any experiences or questions regarding the Fair Plan or need help with your real estate goals, feel free to call or email. Stay informed, stay safe, and stay healthy!