Explanation of the FAIR Plan
High-Risk Homes and How to Get a FAIR Plan Policy
The Fair Access to Insurance Requirements (FAIR) Plan is a state-mandated program that provides fair access to insurance for individuals who are having trouble insuring their property due to the fact that insurers consider them high risk. The FAIR plan is a "shared market plan."
FAIR Plans Help Cover Higher Risk Properties When Standard Insurance Won't
FAIR Plans are state programs sometimes subsidized by private insurance companies. These plans often provide insurance to people that would otherwise be denied insurance on their property due to a high-risk area or other related high-risk problems.
Your state insurance department can give you more information on it's particular FAIR Plan or you can check out the state by state list of where you can get help for the FAIR Plan insurance program below.
The FAIR Plan and High-Risk Insurance
High-risk insurance is when the insurance company has decided that the risk of having claims at a specific location or area is high based on:
- geographic data,
- "loss history" or having a high number of claims incidents for the location or specific home.
Where Do You Get Insurance for a "High Insurance Risk" Area?
Standard insurers do not specialize in high-risk properties and therefore will often refuse to insure them by either not insuring in the first place, or by refusing to renew a high-risk location once the insurance policy term is up. An insurance company's underwriting guidelines will usually dictate what risks they are comfortable with or not. You can get insurance for high-risk homes or properties from specialty insurers, some of which may be non-admitted insurers. Non-admitted insurance companies will often think outside the box or specialize in risks other insurers are uncomfortable with.
What Makes a Home High-Risk?
- If you live in an area that is prone to natural disasters, like tornado alley, or where there is a high incidence of hurricanes or windstorms, your property may be considered high-risk.
- If you live in an area that is prone to high crime levels, vandalism or theft
- If your home has not been renovated or is in disrepair
- If you have had many claims
What to Do if You Have Trouble Finding Home Insurance
If you are purchasing your first home or a new property and are having a hard time finding an insurance company to insure you, try asking your realtor if they know of insurance companies or brokers in your area that will write policies in the area. Insurance brokers have access to many different insurance companies and will work to find you something.
You can also contact your local State Insurance Commissioner's Office and they will point you in the right direction. You may still be able to find a policy with a private insurer that is comfortable and offers good coverage. The FAIR Plan should be used as a last resort.
You can also try to negotiate: Consider the reasons that you are being refused insurance and try negotiating with the insurance company. Very often if you make adjustments or repairs, or consider higher deductibles, you may be able to obtain coverage. Make sure you try everything with a few standard insurers before going to the FAIR Plan.
Conditions to Be Eligible for the FAIR Plan
According to the Insurance Institute, even the FAIR Plan has conditions that must be met. Just because you have a high-risk home, it does not mean the fair plan will accept you. You may be asked to limit the risk of fire, theft or water damage by installing anti-theft or alarm devices, you may be asked to install water backup valves, or make repairs on your home such as replacing or fixing a roof, or replacing your wiring. If these types of conditions would have made you eligible for standard insurance, you are probably better off doing your necessary repairs and sticking with a standard insurance company. Standard insurance companies are usually less expensive than a high-risk insurer.
When to Look for FAIR Plan Insurance
If you have exhausted all the options outlined above, and you can't seem to find an insurance company to accept your risk, then you have the option of applying for insurance with the FAIR Plan. Keep in mind, however, if the reason for a refusal to insure your property is not due to matters beyond your control, even the FAIR Plan has the right to refuse coverage if you do not adhere to their recommendations. The situation varies case by case, so the best idea is to contact them directly to discuss the conditions of the FAIR Plan as they apply to your situation. You may also be eligible for additional insurance endorsements that may improve the base coverage.
Where to Find FAIR Plan Insurance Help State by State
Citizens Property Insurance Corporation [Florida]
How to Get Insurance When You Live in a High-Risk Area
If you have been unsuccessful in obtaining insurance for your home because it is designated as high risk or you have been refused insurance, and you have already tried to negotiate with standard private insurers and exhausted all other options, then you can contact the FAIR Plan administrator in your state to find out more information about the FAIR plan and how to get insurance on your home.
FAIR Plan Administrator Phone Numbers by State
District of Columbia 202-393-4640
Florida JUA 850-513-3700
Florida Windstorm Und. Assoc. 904-296-6105
Louisiana FAIR Plan 504-831-6930
New Jersey 973-622-3838
New Mexico 505-878-9563
New York 212-208-9700
Rhode Island 617-723-3800
South Carolina 803-737-6180
West Virginia 215-629-8800