What does the CA Fair Plan Cover?
The CA Fair Plan can cover your home much like a homeowners policy. It offers coverage for personal property, separate structures and loss of use. It does not offer liability or medical payments.
The main limitation is not what it covers but when. In other words it depends on the cause of the loss which insurance contracts call "perils". The good news is that it covers damage by fire and lightning along with damage by smoke and internal explosion. Extended coverage can be purchased for damage by windstorm or hail, explosion, riot or civil commotion, aircraft, vehicles and volcanic eruption and vandalism/malicious mischief.
The CA Fair Plan does not cover a loss by theft, falling objects, water damage, weight of Ice, snow or sleet, electrical current or falling objects.
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Is the CA Fair Plan a good option?
If structured by an experienced and knowledgeable insurance professional who understands the limitations and optional coverages of the CA Fair Plan, then yes it can offer good coverage for most homeowners.
It is designed for those who have exhausted any better alternatives.
The key will be to find a companion or supplemental policy that many carriers offer that will cover those "perils" that the Fair Plan doesn't cover.
Since the CA Fair Plan only recently began offering extended replacement cost, it is important to make sure your policy includes this important coverage over and above your estimated reconstruction cost. This is important to make sure you have enough to rebuild after a wildfire that destroys several homes in your area since reconstructions cost spike dramatically when that occurs.
These demand surge spikes have recently resulted in up to 100% increases in the cost of reconstruction in the area.
CA Fair Plan is priced according to risk and is often higher in cost than than other options. Although not recommended, you can save money by minimizing or removing coverage of personal property, loss of use, etc, but just make sure you understand how much you are self-insuring for over and above your deductible.
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