What are FAIR Plans and How Do You Insure a High-Risk Home?

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Some homes are difficult to get covered by homeowners insurance companies because of the higher risks of a disaster happening. Insuring a high risk home can be tricky, but it can be done. There are several strategies to pursue, and many states provide a fall back 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. Each state has one, and it is partially subsidized by taxpayers and by private insurers. Instead of one company taking on the risk of your home, multiple sources combine to "carry your risk". Should some peril or natural disaster strike an insured home, the cost of the claim would be shared across the participating companies. The FAIR plan is considered a last resort, and you are only eligible after you have been denied by several private homeowners insurance companies. Not every state has a program. It consists mostly of states with high peril areas.

When is a Home Considered High-Risk?

High-risk homes are those that are located in storm-heavy and crime-heavy areas. These include Tornado Alley in the mid-west, frequent flooding in the Gulf Coast, and earthquake-prone western California. Urban centers where there are many break-ins are also considered high-risk. It does take more than just being in that area though. The home has to have had several claims made against it in the past. 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 yourself have filed multiple claims from multiple homes, then it isn't the home that is risky, but rather you. 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 high-risk.

What to Do if Your Home is Considered High-Risk

The FAIR plan is actually a last resort. There are numerous courses of actions you should try out before applying to your states 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 professionals have access to numerous that can prove to be invaluable for getting your home insured. You may only be familiar with only a handful of the major companies when in reality there can be several alternative insurers in your area alone. An insurance agent can direct you to a company that you would have never thought of, but would be glad to insure your home. "Legacy" carriers like State Farm, Allstate, and Farmers are so large and deal with so many less risky customers, that they are less likely to want to take on your risk. More local or specialty insurers may be more willing to do so.

Talk to Your Neighbors

If you do not want to talk to an insurance professional for monetary reasons, 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 ask who they are insured with. Likely, if they can find an insurance company for a home in the same area as yours, that company would also take you. A neighborhood or community association might be a good resource for 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 several aspects you can negotiate on that can make your home more insurable. For one, you can offer to take 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). You just want to be sure you can afford that deductible should the time come.

There may also be parts of the home that are making the insurance company wary. There may be some disaster prevention measures you can take to make it more insurable: 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 come to sign up for a FAIR plan which starts with a call to your state's 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
  • Not owning a restricted dog Breed like Pitbulls and Rottweilers
  • Not having an unsecure pool

You will have to check with your specific state to know what else may disqualify your 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 see the link to every state FAIR plan homepage. 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 PlanPhone 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
Louisiana 504-831-6930
Maryland 410-539-6808
Massachusetts 617-723-3800
Michigan 313-877-7400
Minnesota612-338-7584
Mississippi 601-981-2915
Missouri 314-421-0170
New Jersey 973-622-3838
New Mexico 505-878-9563
New York 212-208-9700
North Carolina 919-821-1299
Ohio 614-839-6446
Oregon 503-643-5448
Pennsylvania 215-629-8800
Rhode Island 617-723-3800
South Carolina 803-737-6180
Texas 512-899-4900
Texas Windstorm 512-899-4900
Virginia 804-358-0416
Washington 425-745-9808
West Virginia 215-629-8800
Wisconsin 414-291-5353

How Much Does a Fair Plan Cover?

We find most FAIR plans provide coverage around $500,000 to $600,000 maximum for dwelling coverage i.e. just for the structure of the home. As we say 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?

It is difficult to say exactly since it fluctuates state to state, but you should not expect a major discount from the going rates in your state. This is not a program to help low-income 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 where we list prices for different companies.

What if You Are Ineligible 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 altogether. 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 was 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 it may just be the area is too risky and even the best repairs won't convince the company.

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