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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 are state programs that are sometimes subsidized by private insurance companies. These plans often provide insurance to people who would otherwise be denied coverage on their property due to being in a high-risk area or having other related high-risk problems.
Your state insurance department can give you more information on its 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.
With high-risk insurance, the insurance company has decided that the risk of having claims in a specific location or area is high based on:
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 which risks they are comfortable with. You can get insurance for high-risk 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 that other insurers are uncomfortable with.
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 whether they know of local insurance companies or brokers 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.
According to the Insurance Information 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, or you may be asked to install water backup valves or make repairs on your home, such as replacing or fixing a roof or 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 high-risk insurers.
If you have exhausted all of 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, that 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 the 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.
