IS CALIFORNIA FAIR PLAN INSURANCE A GOOD OPTION?
The California fair access to insurance requirements (“fair”) plan was created in July 1968 following the 1960’s brush fires and riots. It is an insurance pool established to assure the availability of basic property insurance to homeowners who own insurable property in the state of California and who, beyond their control, have been unable to obtain insurance in the voluntary insurance market. There is no public funding, or taxpayers’ monies involved. The fair plan is not a state agency.
California fair plan is a nice alternative option and is often priced equal to or less than your current home insurance policy. California Fair Plan offers a basic policy where optional coverages can be added on to correctly cover your property.
We often speak with clients who are misinformed or hesitant to insure their properties thru California Fair Plan. Understanding the “in’s and out’s” of a California Fair Plan policy is important. It’s important to find an insurance agent that is very familiar with the coverages offered by the fair plan; an agent who understands and can offer a supplemental wrap or package policy in addition to the California Fair Plan policy. Our team is knowledgeable about the California Fair Plan, coverages offered and work to offer our customer a correctly packaged policy that meets the needs of our customers.
We understand cost is a factor when buying wildfire insurance in California, but our priority is to properly insure your home.
Why Are More And More Properties Being Insured Through The Fair Plan?
With the unexpected rise of California wildfires over the last few years, insurance companies have found it necessary to lower their concentration of homes located in wildfire areas and/or increase rates to offset the cost of claims to ensure financial stability for their customers. Even loyal customers that have been with the same insurance company for years, are now being impacted if they live near a wildfire prone area. Fortunately, most properties throughout the state can be covered thru California Fair Plan.
What Is Covered By A California Fair Plan Policy?
The California Fair Plan policy is a named peril policy meaning it covers damage from specific loss causes. With a California Fair Plan policy, your home or property is insured if damaged by Fire (including damage from a wildfire), Lightning, Internal explosion and Smoke.
For additional premium, you can also add coverage for many additional loss causes including wind or windstorm, hail, explosion, riot or civil commotion, falling aircraft, vehicles, volcanic eruption and fair rental value.
How Does A Difference In Conditions (Dic) Policy Or Wrap Insurance Work With A Fair Plan Policy?
As stated above, the California fair plan provides coverage for fire, wildfire, lightning, internal explosion and smoke.
A California Fair Plan policy does not cover losses due to theft, burglary, liability and bursting of pipes. To complete a California fair plan policy and “fill in the missing gaps,” we highly recommend you purchase a difference in conditions also known as a wrap policy. Difference in conditions policies are generally reasonably priced and give you a broad range of coverage including liability insurance.
How Do Insurance Companies Determine If A Home Is In A Wildfire Area?
Insurance Companies review several factors to decide if your home is in a high brush or wildfire area:
v Your home’s location in relation to wind patterns, number of past wildfires in your area and your home’s distance to brush.
v Distance to a fire hydrant and home’s distance from a responding (not volunteer) fire station.
v The slope and elevation of your land.
v Your roof construction material
Your Fireline score. A score is given to your home which is based on the density of brush surrounding your property, the slope your home sits on and ease of accessibility of your home. Many insurance carriers are reluctant to insure a home over a Fireline score of 3. It becomes increasingly difficult to find traditional home insurance with a Fireline score of 6+.
Public protection classification is based on a scale of 1-10 (low risk to high risk). The Public Protection Classification score is an indication of your property’s distance from a fire station and hydrant.
Why Am I Being Dropped When There Hasn’t Been A Wildfire In My Area?
Decades ago, a large fire was 15,000 acres. During this time, wildfires were rare and didn’t cause massive amounts of damage. Home insurance carriers would insure homes all throughout California without much concern for wildfire risk.
Today, the number and severity of wildfires has increased significantly. It’s not uncommon for a wildfire to burn over 100,000 acres, damaging hundreds, if not thousands of homes. Damage to one home could easily reach $300,000 or greater. If you multiply $300,000 by 100 homes the accumulated amount an insurance carrier can pay is significant and can create financial instability.