What Is the California FAIR Plan? A Homebuyer's Guide
The California FAIR Plan is a state-created insurance pool, run by the insurance companies licensed in California, that sells basic fire coverage to owners who can’t buy it from a regular carrier. Its residential policy is a limited, named-peril fire policy with a limit of $3 million per location. It is not a full homeowners policy, so buyers who need it usually add a separate difference-in-conditions (DIC) policy for theft, water damage and liability.
In parts of Sonoma, Napa, Marin, Lake and Mendocino counties, a buyer may learn during escrow that the FAIR Plan is the only fire option for the house. This page explains how the policy is built, what to ask for when you buy it, how DIC coverage fits around it, and what changed in 2025 and 2026. For the broader insurance timeline, see our guide to homeowners insurance during escrow; this page is part of our home-buying process guides.
Who the FAIR Plan is for
The FAIR Plan dates to 1968, when the Legislature created it by statute. In the Department of Insurance’s words, member insurance companies, not taxpayers, control its daily operations. The Department urges consumers to shop the regular market first, and the FAIR Plan calls itself an insurer of last resort.
The FAIR Plan’s dwelling page lists the occupancy types it writes, describing each as a temporary solution:
- owner-occupied one-to-four-unit homes, where the owner lives in one or more units;
- seasonal rentals, rented in whole or part for less than a year;
- one-to-four-unit rentals leased to a tenant for at least a year;
- renters’ personal property; and
- condominium owners’ personal property and improvements.
You apply through a licensed broker. The FAIR Plan notes that not all brokers are registered with it, so ask before you start, and use its Broker Finder if yours isn’t. Diamond may refer you to partners we work with; you’re free to choose any provider.
What the dwelling fire policy covers
The base policy covers three named perils: fire and lightning, internal explosion, and smoke. Everything else is either an option you pay for or a gap. The sample Dwelling Fire Policy on the FAIR Plan’s site, labeled effective March 17, 2026, is organized into four coverages.
| Coverage | What it insures | Points to check |
|---|---|---|
| A: Dwelling | The house and attached structures, plus building materials and certain equipment | Land is excluded; set the limit to rebuild cost, not market value |
| B: Other structures | Detached structures such as a garage or barn | Structures used for business or rented to non-tenants are generally excluded |
| C: Personal property | Contents usual to a dwelling | Business property, money and most vehicles are excluded |
| D: Fair rental value | Rent lost when a covered loss makes the home unfit for use | Paid monthly, capped at 1/12 of the Coverage D amount |
The policy also lets up to 10% of Coverage A apply to other structures and to fair rental value. It caps lead and asbestos ordinance remediation at $10,000 and fire department service charges at $500.
Options worth asking for before you bind
A FAIR Plan quote can look inexpensive because it leaves out coverage most buyers assume they have. Ask your broker to price each of these and show you the declarations page.
- Dwelling replacement cost. Without it, partial losses are paid at actual cash value, meaning replacement cost minus depreciation, and a total loss to a building is paid at its pre-loss market value. With it, replacement cost applies only if your limit is at least 80% of full replacement cost, and full payment usually comes after the work is done.
- Personal property replacement cost. Pays the extra amount only after you repair or replace the item.
- Ordinance or law. Excluded unless you select it. It pays the added cost of meeting current building codes for the damaged part of a structure, which matters for an older home in a fire zone.
- Extended coverage perils. Windstorm or hail, explosion, riot, aircraft, vehicles and volcanic eruption are added only if selected.
- Vandalism and malicious mischief. An extra-cost option. It doesn’t cover theft, and it doesn’t apply if the home has been vacant for more than 30 days in a row before the loss.
- Debris removal. Can carry its own limit if selected; hazardous material abatement is excluded.
The vacancy rule deserves attention on a second home or a house you’ll renovate before moving in. Our post on buying a second home in Sonoma County covers occupancy questions more broadly.
What it leaves out, and how a DIC policy fills the gap
The FAIR Plan excludes flood, surface water and sewer backup, earthquake and landslide, and theft, and it has no personal liability coverage. The Department of Insurance points owners who want that protection to a DIC policy, which the FAIR Plan doesn’t sell. The FAIR Plan itself suggests adding DIC, flood or earthquake policies.
United Policyholders, a consumer group, recommends getting at least two DIC quotes and checking the fine print. Its main points:
- Match the DIC’s exclusions to the FAIR Plan policy so nothing falls between them.
- Check how each policy defines perils such as flooding.
- Confirm the limits and whether the DIC pays actual cash value or replacement cost.
- Look for a coinsurance requirement, which could reduce a claim payment.
Expect the combination to cost more than a comparable standard policy. Flood and earthquake are separate purchases; our guides to North Bay flood zones and earthquake fault zones help you decide whether you need them.
Lenders, deductibles and escrow timing
The FAIR Plan policy includes a standard mortgage clause: Coverage A and B payments go to the lender and the owner as their interests appear. United Policyholders says a FAIR Plan policy will satisfy a lender’s requirement that the home be insured. Lenders still set their own rules on coverage scope and deductibles, so get your lender’s answer in writing before you remove your loan contingency.
A workable order for a FAIR Plan purchase:
- When a regular carrier declines during your investigation period, ask your broker for a FAIR Plan quote and a DIC quote at the same time.
- Send both quotes to your lender, with the deductible and the replacement cost option shown.
- Ask the seller for an AB 38 defensible space report and receipts for hardening work, which can qualify for FAIR Plan wildfire discounts.
- Bind both policies before closing and give escrow the evidence of insurance for each.
If the home is in a mapped hazard zone, read our guide to fire hazard severity zones in the North Bay alongside your quotes.
Limits and larger homes
The Department of Insurance lists FAIR Plan limits of $3 million per location for residential policies and $20 million per location for commercial policies. United Policyholders notes the residential cap rose from $1.5 million in 2020. A large estate may need more than one policy, or a high-value or surplus lines carrier instead; see our post on insuring a high-value home in California.
Farm buildings can now be insured, while crops and vehicles are excluded, according to the Department. For vineyard and winery properties, our guide to vineyard and winery insurance covers the commercial side.
Reforms in 2024, 2025 and 2026
| Date | What happened |
|---|---|
| Sept. 2024 | A Commissioner’s bulletin limited how insurers can recover FAIR Plan losses from their policyholders: proportional, prior-approved and spread over no more than two years |
| Feb. 11, 2025 | After the Los Angeles fires, the Commissioner approved the FAIR Plan’s request for a $1 billion assessment on member insurers and ordered more claims staff |
| Feb. 2025 | A second bulletin set out how insurers may seek prior approval to pass part of the assessment through to customers |
| Feb. 2, 2026 | AB 1680, the Make It FAIR Act, was announced with the Commissioner as sponsor; as introduced, it aimed to require a more comprehensive homeowners option, stronger clearinghouse programs and public governance meetings |
| July 1, 2026 | The Department reported that a Los Angeles Superior Court judge rejected a lawsuit challenging the two bulletins; it said approved two-year temporary fees had a median of $28 a year for homeowners |
| Sept. 27, 2026 | The Governor’s office listed AB 1680 (Calderon), titled California FAIR Plan Association, among the bills he signed |
For buyers, the practical point is that the comprehensive residential policy is still described by the Department as in progress. The signing of AB 1680 doesn’t change a policy you buy today, so ask your broker when its provisions take effect. Until the FAIR Plan offers a comprehensive policy, plan on the fire policy plus a DIC. The Department’s Sustainable Insurance Strategy is also meant to move policyholders back to regular carriers, so keep shopping after you close.
When you later move to a regular carrier, its premium may include one of those Department-approved temporary fees. Ask your broker to itemize any fee on the quote.
Lowering the cost and leaving the FAIR Plan
The FAIR Plan offers discounts on the wildfire portion of the premium for hardening the home and its surroundings, and for community programs; its discount documents are dated November 15, 2025. Our post on home hardening for wildfire covers the work that usually qualifies.
The Department and United Policyholders both say to keep shopping. The market changes, and lesser-known admitted carriers and surplus lines insurers sometimes quote homes the major companies decline. Monthly payments without a fee are available, which helps a buyer who has just spent reserves on closing.
This is general information, not insurance or legal advice; talk to a licensed California insurance broker about the policy for your property.
Questions people ask
What does the California FAIR Plan cover?
The dwelling policy covers fire and lightning, internal explosion and smoke. Optional coverages, such as vandalism, extended perils, replacement cost and ordinance or law, cost extra. Theft, water damage, liability, flood and earthquake aren’t covered.
How much does the FAIR Plan cost?
There’s no standard price; it depends on the address, the home’s features, the limit and the options chosen. United Policyholders says a FAIR Plan policy plus a DIC will likely cost more than a comparable standard policy, so compare the combined total.
What is the FAIR Plan’s coverage limit?
The Department of Insurance lists $3 million per location for residential policies and $20 million per location for commercial policies.
What is a difference in conditions policy?
A DIC policy is a separate policy from another insurer that adds coverage the FAIR Plan leaves out, such as theft, water damage and liability. The FAIR Plan doesn’t sell DIC policies.
Will my lender accept a FAIR Plan policy?
A FAIR Plan policy names your lender in a mortgage clause, and United Policyholders says it satisfies a lender’s insurance requirement. Your lender may still have rules on deductibles and coverage, so confirm in writing during escrow.
Can I get off the FAIR Plan later?
Yes. It is meant to be temporary, and the state’s reforms aim to move policyholders back to regular carriers. Ask your broker to re-shop the policy at each renewal, especially after hardening work.
Is the FAIR Plan’s actual cash value coverage enough?
Usually not for a homeowner. Without the dwelling replacement cost option, partial losses are paid at actual cash value, which deducts depreciation, and total losses at pre-loss market value.
Insurance is one of several things that decide whether a house in the hills works for you. If you’re starting a search in wine country or Marin, talk with Diamond about buying, and we’ll build insurance checks into your offer timeline.
Sources & notes
- California Department of Insurance: California FAIR Plan
- California FAIR Plan Association: Dwelling policy (modified Jan. 7, 2026)
- California FAIR Plan Association: Sample Dwelling Fire Policy (effective 3-17-26)
- California Department of Insurance: FAIR Plan assessment approval (Feb. 11, 2025)
- California Department of Insurance: Court dismisses challenge to FAIR Plan bulletins (July 1, 2026)
- California Department of Insurance: Commissioner Lara and Assemblymember Calderon announce AB 1680 (Feb. 2, 2026)
- Office of the Governor: Legislative update (Sept. 27, 2026)
- United Policyholders: The lowdown on the California FAIR Plan
Last reviewed October 2026 by Matthew Martinez.
