The California Fair Plan is a type of home insurance that provides coverage for homeowners who are unable to obtain coverage through traditional insurance companies due to high-risk factors. It is a last resort option for homeowners who live in high-risk areas such as those prone to wildfires or earthquakes.
The California Fair Plan was established in 1968 as a response to the wildfires that devastated the state. It is an association made up of all insurance companies authorized to transact basic property insurance in California. It is designed to provide basic coverage for homeowners who are unable to obtain coverage through the traditional insurance market.
The California Fair Plan covers the following perils:
Fire or lightning
Internal explosion
Smoke damage
Windstorm or hail
Riot or civil commotion
Aircraft or vehicles
Volcanic eruption
Vandalism or malicious mischief
It is important to note that the California Fair Plan does not provide coverage for certain perils such as theft, water damage, or liability coverage. Homeowners are advised to purchase additional coverage for these perils.
The cost of California Fair Plan coverage can be significantly higher than traditional home insurance policies due to the higher risk factors. Homeowners are encouraged to shop around for the best coverage and rates. It is also recommended that homeowners take steps to reduce their risk factors such as clearing brush around their homes or retrofitting their homes to withstand earthquakes.
Homeowners who are interested in obtaining coverage through the California Fair Plan should contact a licensed insurance agent in California. The agent can assist with the application process and provide information on the coverage available.
In conclusion, the California Fair Plan is a last resort option for homeowners who are unable to obtain coverage through traditional insurance companies due to high-risk factors. While it provides basic coverage for certain perils, it is important for homeowners to purchase additional coverage for other perils such as theft and water damage. Homeowners should also take steps to reduce their risk factors and shop around for the best coverage and rates.