What is the California Fair Plan?
For some folks, the California Fair Plan (CAFP) is a last ditch effort to get their property insured.
So what exactly is the Fair Plan? Simply put, FAIR Plans help cover high risk properties when the standard markets won’t.
But first lets answer the question: what makes a property high risk?
A property that is prone to natural disasters, be it fires, tornadoes, windstorms, mudslides. Some properties are considered high risk because they are in areas prone to high levels of crime, but today we will focus on the FAIR Plan as it pertains to the current fire crisis in California.
“FAIR” stands for Fair Access to Insurance Requirements. Ironically, the program was NOT designed in an attempt to insulate us from the worsening of fires here in the state we love.
The FAIR plan is an insurance pool that was created in 1960 in order to give people a place to acquire property insurance. But FAIR Plan can only be utilized once standard markets are exhausted.
The program is not taxpayer funded. All California property insurers are required to participate in the program. If they don’t participate, they aren’t able to conduct business here in California where some 40 million residents live.
The Fair Plan policies are bare bones policies. They provide considerably less coverage than coverage afforded in the standard markets.
FAIR Plan consumers would do well to really educate themselves (with the help of a broker) on what the policies do and do not cover.
FAIR Plan is by nature restrictive because it only covers losses stemming from certain perils. That list of perils is shorter than would be on a standard market policy.
Its very important to understand that the FAIR Plan is a last resort approach to insuring your property.
So what should you do if you’ve seen your premiums skyrocket, or even worse, are unable to find coverage? The best plan of attack is to contact an independent broker who has the ability to write insurance with many carriers. Bonus points if that broker is appointed by the state to write FAIR Plan policies.
At Inspire Insurance Services in Roseville, CA, we have the education and carrier access to find insurance for your high fire risk property. If we’re unable to find a carrier that will take your risk, we are also appointed with the state to write FAIR Plan policies. Simply put, if there’s insurance out there to protect your property, we can make it happen for you.
We know this crisis is creating a bunch of stress for hard working folks across the state. Even if you just need to ask a question or vent about the current situation, give us a call, we’re eager to help out as many people as possible. That number is 916-750-2489.