Marc Cuniberti: A look at California’s FAIR insurance plan
The Cal FAIR insurance plan is the last resort in fire insurance for many homeowners.
Cal FAIR (Fair Access to Insurance Requirements) is not a government agency. It is much like the assigned risk program for problem drivers. Cal FAIR is made up all of the insurers that are licensed to do business in the state of California. Yes, it is made up of the very same companies that may have canceled you. How much each company participates is in direct proportion to the percentage of business they do in California. They share in the profits and losses. That said, one could say they are financially adequate being all the companies are in it and backing it together versus being just one company.
Cal FAIR is basic coverage only. They cover fire, lightning, internal explosion and some optional coverages. From Google: The FAIR Plan provides basic fire insurance coverage for residential and commercial structures, as well as personal property coverage for residential and business occupancies. There are also optional coverages available for both residential and commercial properties. Just a few days ago the California Department of Insurance expanded the coverages of Cal FAIR to better mirror the standard homeowner policies available to those not in a high risk area. Changes are ongoing and you can find out when changes occur and what they are at the Cal FAIR website: cfpnet.com
Cal FAIR does not estimate or warranty coverage will be adequate. That is left up to person applying for the coverage. They will pay up the limit specified given the conditions have been met for a covered peril (a peril is the cause of loss such as fire).
There are standard coverages in homeowner’s policies as it pertains to what is covered. They include the dwelling (the structure and all things “attached to it”), personal property (your stuff), FAIR rental value (your new “rent” in case you have to leave), other structures (structures not “attached”) ordinance of law (cost to bring you house up to the new codes if any), debris removal (haul your burnt out stuff away) and other coverages you can add such as fences, plants and more.
You will still need a separate policy called a “wrap” or “difference in conditions” (DIC) to cover the other perils besides fire.
There are many factors and descriptions that homeowners should review with their agent as you discuss how to proceed and with how much coverage.
Costs will likely increase over current premiums but in most cases insurance can be had, contrary to what some may have heard. Make sure you understand what is covered and what is not and how much is covered. An experience agent can discuss this with you. Agents are plentiful. If you’re not getting the service you require, try another agent. As in all things business, there are good ones and not so good ones.
Marc Cuniberti hosts “Money Matters” on KVMR FM aired on 66 radio stations nationwide. He is a financial columnist for a variety of publications. Marc holds a BA in Economics from SDU with honors 1979. His website is moneymanagementradio.com and he can be reached at 530-559-1214. Visit him on Facebook (FB) under Marc Cuniberti and also on the “Money Matters” and “Money Matters Investing in Community” FB pages and You Tube. The views expressed are opinions only. Mr. Cuniberti is a licensed insurance agent. California Insurance License #0L34249.
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