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When You Run Out of Property Insurance Options, Consider FAIR

by EINSURANCE

Government programs love acronyms, so here’s another one that can be of value if you own property and are having difficulty obtaining homeowner’s insurance: FAIR.  It stands for Fair Access to Insurance Requirements. It was established by the federal government back in the late 1960s and 1970s (the heyday of government acronym-named programs) in response to the difficulty some property owners were having obtaining homeowners insurance in areas affected by civil disorder and riots.

Since Molotov cocktails and similar incendiary devices were the primary destructive device of choice back in the day, FAIR plans initially only offered bare bones policies that covered fire damage sufficiently to satisfy the basic requirements of mortgage lenders. But the times they are a changing. Nearly 50% of all FAIR plans today offer full homeowners insurance coverage that also includes damage from vandalism, riot and windstorm. 

FAIR Plans, which are typically partnerships between private insurance companies, regulators and state legislators, are essentially an insurer of last resort when coverage can’t be obtained through private sector channels. These residual markets have been formed in major urban areas and places at risk for natural catastrophes. Under the FAIR concept, state governments facilitate coverage of a pool of high-risk policy holders. Insurers share the deficits and surpluses of the residual market, the scope of coverage is limited in some areas and the rates are generally significantly higher so as not to present unfair competition in the private market.

The following states have FAIR Plans or assistance in obtaining coverage: Alabama, California, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, New Jersey, New Mexico, New York, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Texas, Virginia, Washington, West Virginia, Wisconsin and the District of Columbia.

Every Atlantic Coast state south of Virginia and all the Gulf Coast states have wind, beach and coastal pools to insure areas vulnerable to windstorm loss. Coverage, rates and deductibles vary widely. Florida and Louisiana have created a hybrid market of last resort to provide wind-only coverage.

Your state’s insurance department or a private insurance company can tell you whether you’re eligible for a FAIR or Wind, Beach and Coastal Plan.

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