California FAIR Plan + DIC Insurance: Fill the Gaps, Keep Your Home Protected

What the California FAIR Plan is, and when you'd use it

The California FAIR Plan is the state's insurer of last resort. It was set up by law to provide basic property insurance when no other option is reasonably available, typically when standard homeowners insurance isn't.

It's not a government insurer. The California Department of Insurance (CDI) describes it as a private association run by insurance companies, not taxpayers.

CDI's advice is to shop the market first. As your broker, I do a diligent search of the regular market before placing you with the FAIR Plan.

Who the FAIR Plan dwelling policy can cover

• Owner-occupied homes with 1 to 4 units
• Seasonal homes
• 1 to 4 unit rentals with leases of at least a year
• Renters' belongings
• Condo unit owners

The residential limit is up to $3 million per location. Commercial policies go up to $20 million.

What a FAIR-Plan-only policy leaves out

The FAIR Plan is a named-peril policy. That means it only pays for the causes of loss it specifically lists. Here, that's fire and lightning, internal explosion and smoke. Vandalism, windstorm and hail can be added for extra cost.

A basic policy doesn't cover theft, flood, earthquake, or personal liability, medical payments to others, or damage to others' property. Flood and earthquake need separate policies.

Claims are paid at Actual Cash Value (ACV) unless you buy the replacement cost option. ACV is the value of what you lost after depreciation, and it's usually far less than the cost to rebuild. Temporary rent is limited to 10% of the dwelling limit (20% with an upgrade).

If you only have the FAIR Plan, you may not have:

• Liability
• Theft
• Water damage from plumbing
• Full loss of use
• Replacement cost (unless added)
• Earthquake
• Flood

FAIR Plan only vs. FAIR Plan + DIC

Compare the coverage, not just the premium. Got a cheaper quote? Send both and I'll show you what's different, or compare two quotes line by line yourself.

Questions to ask about any cheaper quote

• Is it Actual Cash Value or replacement cost?
• Is there a DIC, and do its limits and exclusions line up with the FAIR Plan?
• What are the deductibles?
• Is the dwelling limit based on a real rebuild-cost estimate?

Being underinsured is a real risk. United Policyholders reports that two-thirds of the disaster victims they help through their Roadmap to Recovery program find themselves underinsured.

How a DIC policy fills the gaps

A Difference in Conditions (DIC) policy is a separate policy that sits alongside the FAIR Plan. The FAIR Plan doesn't sell DIC policies; they come from private insurers.

A DIC can add coverage for things like theft, water damage and liability, so the two policies together look more like a standard homeowners policy.

It does mean two policies, two carriers, two premiums and two claim numbers. That's why lining them up matters.

CDI publishes a list of insurers that sell DIC policies designed to go with a FAIR Plan policy.

Many FAIR Plan homeowners don't have a DIC. According to a CDI fact sheet, for every two new or renewed FAIR Plan policies there is one new or renewed DIC policy (CDI notes this count covers only the admitted market).

What to check in a DIC

• How covered and excluded perils are defined
• Whether the exclusions line up with the FAIR Plan
• Whether limits are Actual Cash Value or replacement cost
• Any coinsurance clause (a rule that can reduce a claim payment if you're insured for less than a set share of the property's value)

Get at least two DIC quotes so you can compare.

Does FAIR Plan + DIC cost more than a regular homeowners policy?

Honestly, it often does. United Policyholders says FAIR Plan plus DIC will likely cost more than a standard policy with similar protection. There's no fixed statewide price.

Your price depends on your location, rebuild cost, construction, deductibles, the options you choose, and any wildfire mitigation work.

CDI says FAIR Plan policyholders can get a discount on the wildfire part of the premium for hardening their homes. Monthly payments without a fee are available.

How I place FAIR Plan + DIC, step by step

1. 1I review your current policy, non-renewal notice and declarations page.
2. 2I shop admitted carriers first (insurers licensed and regulated by the state), then surplus lines (E&S) carriers, specialty insurers that can take on risks admitted carriers won't.
3. 3If the FAIR Plan is the right fit, we set a realistic rebuild cost. The FAIR Plan doesn't estimate it for you. If you've remodeled, here's why that matters.
4. 4We choose your FAIR Plan options: replacement cost, vandalism and extended coverage.
5. 5I quote the DIC and line it up with the FAIR Plan policy on limits, perils and deductibles.
6. 6I coordinate both renewals and re-shop the private market every year.

FAIR Plan representatives can't legally advise you on coverage or limits, but a licensed broker can.

I'm registered with the California FAIR Plan as a broker, so I can place your FAIR Plan policy and your DIC together.

FAIR Plan + DIC for rentals, condos and higher-value homes

Landlords (1 to 4 units)

The FAIR Plan writes rentals. If you're not sure how your property is classified, read owner-occupied vs. tenant-occupied.

Condo owners

The FAIR Plan offers condo unit-owner coverage.

Homes over $3 million to rebuild

The residential limit is $3 million per location. Higher-value homes may need specialty options.

Getting off the FAIR Plan

The FAIR Plan calls itself a temporary solution. Keep re-shopping the private market, and know that home hardening can help.

CDI is working to bring more private insurers back and move people off the FAIR Plan. I re-shop your coverage at every renewal so you're ready when a better fit opens up.

Why South Bay homeowners work with Mark

“Life's too short for generic advice.”

Learn more about Mark, see California coverage, or browse more knowledge articles.

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