Compare FAIR Plans for High-Risk Home Insurance

Compare FAIR Plans for High-Risk Home Insurance

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Some homes are particularly difficult to buy homeowners insurance for due to a relatively high risk of a disaster happening. Insuring a high-risk home can be tricky, but it can be done. There are several strategies you can pursue, and many states provide a fallback option: FAIR plans.

What is the FAIR plan?

Fair Access to Insurance Requirements (FAIR) programs were created to help people with high-risk homes find insurance. In each state that has one, it is partially subsidized by taxpayers and by private insurers. Instead of just a single insurance company taking on the risk of your home, multiple carriers band together to "carry your risk."

Should a peril or natural disaster strike an insured home, the cost of the claim would be shared across the participating companies. FAIR plans are considered a last resort for coverage, and you are only eligible after you have applied for, and been denied by, several private homeowners insurance companies. Not every state has a FAIR program, since most participating states are those with high-peril areas.

When is a home considered high risk?

Insurers consider a home high risk if it is located in, for example, a storm-prone or crime-heavy area. Some high-risk areas include Tornado Alley in the Midwest, frequent flooding in the Gulf Coast, and earthquake-prone western California). Urban centers where there are many break-ins are also considered high risk.

For a home to fall into the high-risk category takes more than just being located in such an area though. The home must have had several past insurance claims made. Insurance companies use a database called CLUE, where all insurance claims are filed and stored. If the home you want to buy comes up often in that database, it will be harder to find homeowners insurance.

If you have filed multiple claims from multiple homes, then insurers will conclude that it isn't the home that is risky, but rather you yourself. In this case you will need to pursue other options for insuring your home, because even a FAIR plan may not take you if you are deemed a high-risk homeowner.

What to do if your home is considered high risk

The FAIR plan should actually be your last resort. There are numerous courses of actions you should try out to obtain insurance coverage before applying to your state's FAIR plan.

Find an insurance agent

Your best bet for finding home insurance for a risky home is to ally yourself with an insurance professional. Insurance agents have access to many carriers that can prove to be invaluable for getting your home insured. You may only be familiar with a handful of the major companies when in reality there might be several alternative insurers in your area.

An insurance agent can direct you to a company that you might never have thought of, but would be glad to have insure your home. Legacy carriers like State Farm, Allstate, and Farmers are so large, and deal with so many low-risk customers, that they are less likely to want to take on you higher risk. Local or specialty insurers may be more willing to do so.

Talk to your neighbors

If you do not want to hire an insurance professional, or you have trouble locating one you trust, you may also be able to help your own cause. Your first step should be introducing yourself to your neighbors and asking what company they are insured with. Likely, if they can find a policy for a home in the same area, that company would also take you. A neighborhood or community association might be a good resource for identifying insurers with history or business in the area.

Negotiating with a homeowners insurance company

If you get one foot in the door and are talking to an homeowners insurance company, there are a few ways to negotiate that can make your home more insurable. For one, you can offer to accept a higher deductible, which would ease the financial risk of the company (since you would be less likely to file a claim unless there was a severe and costly disaster). Just be sure that you would be able to afford that deductible should the time come.

It may be specific parts of the home that appear as risks to the insurance company. There also may be some preventative measures you can take to make your property more insurable. For example, you could elevate the foundation, improve the siding, upgrade to walls that collect less moisture, etc. Of course, any home improvement will cost a good deal of money, so you should really only do them if you are in love with the home and plan to stay there for many years.

Finally, bundling is a good way to get in with an insurance company. If you have your auto insurance policy with State Farm, they will be more likely to accept your home as well. Better yet, if you offer to move your auto insurance policy to State Farm or another company that bundles home and auto policies, that can make them more willing to insure your high-risk home.

How to sign up for a FAIR plan

If all the above fails, then it's time to sign up for a FAIR plan. Start with a call to your state agency. The reason we save the FAIR plan for last is because it is not a comprehensive policy in most states. A standard homeowners insurance policy covers 16 types of perils, your personal property and provides liability; a FAIR plan will provide basic insurance against disaster caused by fires, windstorms, vandalism, and riot and personal property in some states like New Jersey.

Each state's plan comes with different rules and restrictions, and there is no guarantee of admission into your state's program. The following are some general qualifications your home needs:

  • Compliance with local building codes
  • Someone occupying the house
  • No open insurance claims against the house
  • No restricted dog breeds like pitbulls and rottweilers
  • No unsecured pools

Check with your state agency to know what else may disqualify you from getting a FAIR plan. Most states' programs require you to file an application through an insurance agent. You usually will be able to request an agent through the FAIR plan and have them fill out your application. You may also need to prove that you have been already denied by several home insurance companies.

Below you can find links to the FAIR plan homepage for each state that has one. Notable states without programs are Arizona, Alaska, Utah, Idaho, and essentially most states located in the interior of the country that do not get tornadoes. Texas

State FAIR Plan
Phone Number
Alabama 334-943-4029
California 213-487-0111
Connecticut 860-528-9546
Delaware 215-629-8800
Washington DC 202-393-4640
Florida 850-513-3700
Georgia 770-923-7431
Illinois 312-861-0385
Indiana 317-264-2310
Iowa 515-255-9531
Kansas 785-271-2300
Kentucky 502-425-9998
Show All Rows

How much does a FAIR plan cover?

We find most FAIR plans provide a maximum of around $500,000 to $600,000 for dwelling coverage, meaning just for the structure of the home. As noted above, some states like New Jersey provide $200,000 worth of coverage for personal property. Some states, like Ohio, provide two types of coverage — a basic fire policy and a more comprehensive homeowners policy that also protects your personal possessions.

How much does a FAIR plan cost?

The cost of a FAIR plan fluctuates from state to state, but you should not expect a major discount from the going rates. The FAIR program is not meant to help low earners afford insurance, so the pricing will generally reflect what you are paying for. If you are getting a bare-bones policy, it will likely cost the same as a bare-bones policy from a private insurance company.

To get a good idea of what homeowners insurance in your state costs, you can go here, and then find your state to see prices for different insurance companies.

What if you are not eligible for a FAIR plan?

If everything fails, and you cannot qualify for a FAIR Plan, the only options may be to live in the home uninsured, make major improvements, or just forgo buying the home. The first option shouldn't be considered (and can't be considered if you are financing the home), because if a home is in a high-risk area, and you don't have insurance, you are asking for a huge damage bill at some point in the future.

You might as well consider the second option first, and make the major improvements to the home if you are unwilling to explore the third option, forging the home. The major improvements will cost a lot of money, but if they will make your home insurable, and you want it to be your home for years and years to come, that may be the best option.

Just be sure to check with your insurance agent or multiple insurance companies that making those changes would get them to insure the home — sometimes if the area is too risky, even the best repairs won't convince the company.

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