What Is the California FAIR Plan?

What Is the California FAIR Plan? A Lifeline for Homeowners in High-Risk Areas

As wildfires continue to impact California communities, more homeowners are finding themselves dropped by traditional insurance companies or unable to get coverage at all. If you’ve been denied coverage due to wildfire risk or live in a high-fire zone, you may have heard of the California FAIR Plan. But what exactly is it, and what should you know before relying on it?

The California FAIR Plan (Fair Access to Insurance Requirements) is a state-mandated fire insurance program created in 1968. It’s a last-resort option, designed for homeowners and renters who can’t get standard insurance due to wildfire risk, past claims, or location.

FAIR Plan policies offer basic fire-related coverage, including:

• Fire and lightning
• Smoke damage
• Internal explosion

That’s it. If you need protection for theft, water damage, personal liability, or windstorms, you’ll need to purchase additional policies, like a Difference in Conditions (DIC) policy.

 Who Funds the FAIR Plan?

Contrary to popular belief, the FAIR Plan isn’t funded by the state—it’s backed by all insurers licensed in California. By law, every insurer is required to participate in and share the risk. When claims exceed the Plan’s reserves—as they did following the 2024 and 2025 wildfires—insurers may be required to provide additional funds, which could ultimately affect rates or availability.

 Should You Use the FAIR Plan?

If you’re buying or refinancing a home in a high-risk fire area and your lender requires fire insurance, the FAIR Plan may be your only option. But it should be viewed as a temporary solution while you work to obtain better coverage.

Before applying:

1. Speak to a licensed insurance broker—they must document your attempts to get traditional coverage first.
2. Consider bundling with a DIC (difference in conditions) policy to fill in coverage gaps (liability, theft, water damage).
3. Prepare for higher premiums and limited coverage.

Bottom Line for Buyers and Sellers

As a real estate professional, I always recommend reviewing insurance options early in the buying process. Especially if you’re purchasing in wildfire-prone areas like Altadena, La Cañada, La Crescenta, or the Sierra Foothills. The FAIR Plan can help you close, but it’s not a long-term insurance solution.