Not every home is in an ideal place for homeowners insurance – at least as far as traditional home insurance companies are concerned. They often consider homes where there is a high risk for natural disasters uninsurable. When this happens, homeowners in some states can rely on FAIR plans to provide the coverage they need. However, FAIR plans are usually considered a “market of last resort,” which means homeowners have to be denied by other insurance companies before they can apply.

FAIR Plans are usually subsidized by taxes and private insurance carriers that pool resources to pay claims. Unfortunately, the policies provided by these plans are often limited and offer the most basic coverage.

When do homeowners need a FAIR plan?

The most common reason homeowners end up with a FAIR plan is because they’re considered high risk, but what that means depends on your state. In many places, homes are more difficult to insure when they’re in an area known for frequent natural disasters. For example, California has major geographic areas (some even within several city limits) that are deemed FAIR plan locations because of wildfire risks.

Homeowners may also need a FAIR plan if:

• Their home is in a high-crime area.
• Their home is in disrepair.
• They have filed a lot of claims in the past.

The specifics for any of these depend on your state’s FAIR plan.

What does a FAIR plan cover?

FAIR plans tend to be limited in the scope of coverage they offer. For example, traditional homeowners insurance policy offers six coverage areas, but some FAIR plans only cover the structure of your home﹘not any of the contents, or your personal liability.

You may also find that FAIR plans limit the perils covered under the policy. Many are named-peril policies, so they only cover the 16 or so events listed in the policy document. Compare that to an HO3 policy that covers all events unless they are specifically excluded from coverage.

How to sign up for a FAIR plan

Most states require that you get declined by standard insurance companies before you apply for a FAIR plan. Once you’ve met that requirement, then you can usually sign up for a FAIR plan by contacting an agent or broker who offers it. You may be able to find agents and brokers who can sell FAIR plans by going to the program’s website.

You may also have to meet additional criteria. For example, many states only admit homes to their FAIR plans if:

• They are in compliance with local building codes.
• Someone is living in the home.
• There are no open insurance claims on the home.
• The home doesn’t have an unsecured pool.
• No one on the property owns a restricted dog breed.

FAIR plans do not necessarily take every applicant. If that happens, you may have to make major upgrades to your home. Discuss your plans with an insurance agent familiar with the FAIR plan in your state before you do so you know if you’re putting your money to good use.

Contact information for FAIR plans