Understanding CA Fair Plan Eligibility

This is an important reminder that the FAIR Plan is the insurer of last resort.

California Insurance Code section 10090(d) states that coverage is available for property insurance at the FAIR Plan that cannot be obtained through the normal insurance market. The code defines the normal insurance market as both admitted insurers and licensed surplus line brokers.

Risks should be submitted to the FAIR Plan for coverage only after a diligent search of the normal insurance market has been made. A diligent search is mandated under California Insurance Code section 10093(a).

Please note, brokers submitting applications to the FAIR Plan will now be required to e-certify that the applicant is unable to obtain basic property insurance through the normal insurance market and that a diligent search was made as mandated by the California Insurance Code. You will be required to type in your name and acknowledge that you understand your responsibility, that basic property insurance is not available in the normal insurance market, and have completed a diligent search on behalf of your customer.

While we recognize that there have been changes in the market recently, a nonrenewal by an existing carrier does NOT automatically qualify a risk for a policy with the FAIR Plan.

It should be noted that the FAIR Plan does not compete with carriers in the normal insurance market. Properties that qualify for a property policy with another carrier should not be placed with the FAIR Plan solely because of a lower premium.

If the FAIR Plan is the only insurance option available after a diligent search, another search of the market should be conducted annually in advance of the renewal.

This search should be a part of the discussions held with your clients regarding coverage options and available limits of coverage. Failure to comply with the regulations, set forth in the insurance code, could result in you losing your ability to write business with the FAIR Plan.