Quick answer: A FAIR plan is a state-mandated insurance pool that sells basic property coverage to homeowners who cannot get a policy in the regular market. According to the Insurance Information Institute, FAIR plans operate in nearly three dozen states and the District of Columbia. They often provide dwelling coverage for named perils such as fire, with limited or no liability and personal property coverage, so many owners add a “difference in conditions” policy from a private insurer. Some states run separate plans, such as Florida’s Citizens Property Insurance Corporation and beach or windstorm pools in coastal states. Treat a FAIR plan as a safety net and keep shopping for private coverage.
When insurers pull back from areas with high wildfire, hurricane or other risks, some homeowners receive nonrenewal notices and cannot find a replacement policy. State FAIR plans exist for exactly that situation. They keep homes insured, which also keeps mortgage lenders satisfied, but they are not designed to match a standard homeowners policy.
This guide explains how FAIR plans work, what they cover and how to fill the gaps. For a full overview of homeowners coverages, see our homeowners insurance guide, and if you have just received a nonrenewal, our guide on what to do after a homeowners nonrenewal covers next steps.
Sources: Insurance Information Institute (Triple-I), “Residual market property plans” and FAIR plan consumer resources; Urban Property Protection and Reinsurance Act of 1968; California FAIR Plan Association published coverage information; Florida Statutes § 627.351(6) (Citizens Property Insurance Corporation) and Florida Market Assistance Plan information; National Association of Insurance Commissioners (NAIC) consumer guidance. Plan rules, limits and eligibility change often. Check your state’s plan website and your state insurance department for current details. This is general information, not insurance advice.
What a FAIR Plan Is
FAIR stands for Fair Access to Insurance Requirements. FAIR plans were created in the late 1960s, after urban unrest made property insurance hard to get in many city neighborhoods. The federal Urban Property Protection and Reinsurance Act of 1968 encouraged states to set them up. Today they serve homeowners and businesses in areas with high exposure to wildfire, hurricanes, crime or other hazards, as well as properties private insurers decline for other reasons.
FAIR plans are often called “insurers of last resort” or part of the residual market. They are usually run as associations of all the insurers licensed to write property coverage in a state. Those insurers share the plan’s results, including losses.
Key features, as described by the Insurance Information Institute:
- Availability: FAIR plans operate in nearly three dozen states and the District of Columbia.
- Coverage type: They typically provide basic coverage, often limited to the dwelling and a short list of named perils.
- Eligibility: Applicants generally must show they could not find coverage in the voluntary market. Requirements vary by state, and some plans require proof that one or more insurers declined the property.
- Property standards: Plans may require that the property meet basic standards and may inspect it.
What a FAIR Plan Usually Covers
Coverage varies by state, but FAIR plan policies are often more limited than a standard HO-3 policy. Common characteristics include:
| Feature | Typical FAIR plan | Typical HO-3 policy |
|---|---|---|
| Perils covered | Named perils, often fire, lightning, smoke and sometimes windstorm and vandalism | Open perils on the dwelling, broader named perils on contents |
| Dwelling coverage | Yes, up to plan limits | Yes |
| Personal property | Optional or limited in many plans | Included |
| Personal liability | Often not included | Included |
| Theft | Often limited or not included | Included |
| Water damage | Often limited | Covered for sudden and accidental losses |
| Loss of use | Limited or optional | Included |
Because of these gaps, many FAIR plan policyholders buy a second policy to fill them.
Difference in Conditions Policies
A difference in conditions (DIC) policy is a private policy designed to sit alongside a FAIR plan policy and cover what the FAIR plan does not. A DIC policy can add coverage for perils such as theft and water damage, personal liability, loss of use and personal property. In California, where the FAIR Plan provides fire-focused coverage, DIC policies are a common pairing. Ask an agent which insurers in your state offer DIC coverage that coordinates with your FAIR plan policy.
The California FAIR Plan
California’s FAIR Plan has become one of the best-known residual market plans as wildfire risk has led some insurers to limit new business. According to the plan’s published information, its dwelling policies can provide dwelling coverage up to $3 million per location, with optional coverages available. The basic policy focuses on fire, lightning, internal explosion and smoke, with additional perils available. The California Department of Insurance and the FAIR Plan’s website have current details on limits and options.
Florida: Citizens Property Insurance Corporation
Florida created Citizens Property Insurance Corporation in 2002 as a not-for-profit, state-created insurer for property owners who cannot find coverage in the private market. Unlike many FAIR plans, Citizens offers multiperil homeowners policies, as well as wind-only policies in certain coastal areas.
Eligibility is defined in Florida Statutes § 627.351(6). A key provision is often called the 20% rule: generally, a property is not eligible for Citizens coverage if an authorized private insurer offers comparable coverage at a premium no more than 20% higher than the Citizens premium. The thresholds and rules have changed over time, so check Citizens’ current eligibility requirements.
Florida also runs the Florida Market Assistance Plan (FMAP), which helps homeowners find private coverage and is often involved in the Citizens application process. Citizens policyholders may receive offers from private insurers through a clearinghouse or takeout programs; read these offers carefully and compare coverage, not just price.
Beach and Windstorm Plans
Several coastal states operate separate plans for wind and hail coverage in designated coastal areas, often called beach plans or windstorm pools. Examples include the Texas Windstorm Insurance Association, which provides wind and hail coverage in designated Texas coastal counties, and the North Carolina Insurance Underwriting Association, which serves coastal North Carolina. Homeowners in these areas may buy a homeowners policy that excludes wind and add a separate wind policy from the state plan. Our guide to hurricane and wind/hail deductibles explains how wind deductibles work.
Flood Is Separate
FAIR plans, Citizens policies and beach plans generally do not cover flood. Flood insurance is available through the National Flood Insurance Program and private flood insurers. If your property is in a high-risk area, flood coverage deserves a close look. Our guide to flood insurance basics explains the options.
Surplus Lines Insurers: Another Option
Before turning to a FAIR plan, ask an agent about surplus lines insurers, sometimes called excess and surplus or nonadmitted insurers. These companies can write coverage that standard insurers will not, and they have more freedom over rates and policy forms. That flexibility can make them a useful option for high-risk properties, but there are trade-offs. Surplus lines policies are generally not protected by state guaranty funds if the insurer fails, and the policy terms may differ from standard forms. In many states, a surplus lines broker must first show that coverage was not available from admitted insurers. Read the policy as carefully as you would a FAIR plan policy.
Filing a Claim With Two Policies
If you have a FAIR plan policy and a DIC policy, a single event can involve both. A wildfire that damages your home and leads to smoke damage and theft during an evacuation might, for example, involve fire coverage under the FAIR plan and theft or loss of use coverage under the DIC policy. Report the loss to both insurers promptly, share the same documentation with each and keep a log of every conversation. Each policy has its own deductible and claim process, so ask each insurer how it coordinates with the other.
How a FAIR Plan Affects Your Mortgage
Most mortgage lenders accept FAIR plan coverage for the dwelling, which is one of the plan’s most important functions. Without it, a lender may buy force-placed insurance and charge you for it. Send your servicer the FAIR plan declarations page as soon as the policy is issued, and confirm that the lender is listed as mortgagee. If the FAIR plan’s maximum dwelling limit is lower than your lender requires, ask the plan and your agent about excess coverage options.
Pros and Cons of a FAIR Plan
Advantages
- Keeps your home insured when private insurers decline it.
- Satisfies most mortgage lenders’ requirements for hazard insurance, avoiding force-placed coverage.
- Offers a path to coverage for properties in high-risk areas.
Disadvantages
- Coverage is often narrower than a standard homeowners policy.
- Premiums may be higher than private coverage in some areas, and plans may raise rates as exposure grows.
- Filling gaps with a DIC policy adds a second policy, a second premium and a second claim process.
- Some plans have lower maximum limits than private insurers.
How to Apply for a FAIR Plan
- Shop the private market first. Work with an independent agent who represents multiple insurers, including surplus lines carriers where allowed.
- Collect proof of declinations if your state requires it.
- Apply through a licensed agent or broker or directly through the plan’s website, depending on the state.
- Prepare property details, including roof age, updates to wiring and plumbing, and any mitigation features.
- Review the policy carefully to understand covered perils, exclusions and limits.
- Add a DIC or companion policy if needed for liability, theft and other coverages.
Getting Back to the Private Market
A FAIR plan is meant to be temporary for many homeowners. To improve your chances of returning to the private market:
- Mitigate risk. Wildfire defensible space, ember-resistant vents, roof upgrades, hurricane shutters and roof-to-wall connections can make a property more insurable. Some states offer discounts or programs that recognize mitigation.
- Document improvements. Keep receipts, inspection reports and certifications.
- Shop every year. Insurers’ appetites change. A company that declined you last year may write your area now.
- Ask about takeout offers in states like Florida.
- Review your coverage needs so you compare policies on equal terms.
Understanding Your FAIR Plan Declarations Page
When your policy arrives, compare the declarations page with what you asked for. Confirm the property address, dwelling limit, any optional coverages you selected, the deductible, the covered perils listed and the mortgagee information. If the policy settles losses at actual cash value rather than replacement cost, depreciation will reduce claim payments, which matters for older homes. Our explainer on homeowners Coverages A through F can help you match FAIR plan terms to the standard coverages you may be used to.
Questions to Ask Before You Buy
- Which perils does the FAIR plan policy cover, and which are excluded?
- Is personal property or liability available, and at what limits?
- What is the maximum dwelling limit?
- Is the policy settled at replacement cost or actual cash value?
- Which private insurers offer DIC coverage that coordinates with this plan?
- What mitigation steps could make my home eligible for private coverage?
Frequently Asked Questions
What does FAIR plan stand for?
Fair Access to Insurance Requirements. FAIR plans are state-mandated pools that provide basic property insurance when private coverage is not available.
Does a FAIR plan cover liability?
Often not. Many FAIR plan policies focus on the dwelling and named perils, so owners commonly buy a difference in conditions policy for liability and other gaps.
How many states have FAIR plans?
According to the Insurance Information Institute, FAIR plans operate in nearly three dozen states and the District of Columbia.
What is the Citizens 20% rule in Florida?
Under Florida law, a property generally is not eligible for Citizens if a private insurer offers comparable coverage at a premium no more than 20% above the Citizens premium.
Can I leave a FAIR plan for a private policy later?
Yes. Many homeowners return to the private market after making mitigation improvements or when insurers expand in their area. Shop at least once a year.
The Bottom Line
A FAIR plan keeps your home insured when private insurers will not, but the coverage is usually basic. Know what your policy leaves out, consider a difference in conditions policy for liability and other gaps, add flood coverage where needed and keep working toward a private policy with mitigation and annual shopping.
