A Fair Plan policy satisfies your mortgage lender’s requirements. If you’re dropped by your current carrier or if you’re closing escrow, a Fair Plan policy will be accepted by your lender.
IS FAIR PLAN WILDFIRE INSURANCE A GOOD OPTION?
California Fair Plan is a great option and is often priced equal to or less than your current home insurance policy. CFP offers a basic policy where optional coverages can be added on to correctly cover your property. It’s important to find an insurance agent that’s very familiar with the coverages offered by the Fair Plan; an agent who understands how to package a policy.
The CFP policy is like a plain hamburger. Some people need to add cheese and mustard. Some may need lettuce, mustard, cheese and catsup. Some may just need a plain hamburger. Everyone’s situation varies and the wrong hamburger could result in costly mistake.
We often speak with clients who are misinformed or hesitant to insure their properties thru California Fair Plan. Issues with CFP policies are most likely NOT the fault of the policy/product itself, but rather the agent writing the policy. Basically, that agent didn’t give the client the correct “hamburger.” Unless you know the “in’s and out’s” of a Fair Plan policy, it’s easy to make an error and not provide proper coverage.
Einhorn Insurance works with the Fair Plan daily. We are knowledgeable about all coverages offered, correctly package a policy and have a strong handle on items related to billing, underwriting and policy updates/changes.
WARNING… many insurance agencies focus on price/premium and offer “cheap” CFP policies. There’s a reason insurance is cheap…it’s because your policy is missing necessary coverages. When your property is located in a high fire risk area, you can’t afford to cheap out on insurance.
We understand cost is a factor when buying wildfire insurance in California, but our #1 goal is to properly insure your home. Even after we add the necessary optional coverages, Einhorn Insurance can usually keep your CFP policy at a reasonable price.
WHY ARE MORE AND MORE PROPERTIES BEING INSURED THRU THE FAIR PLAN?
As weather warms up, wildfires have become more of a threat and have hit the pockets of insurance companies hard. With the unexpected rise of California wildfires, insurance carriers must drop homes located in wildfire areas or increase rates to offset the cost of paying out on claims. Even loyal customers who’ve been with the same insurance company for years (or even decades), are now being dropped if they’re in a wildfire area. Fortunately, most properties throughout the state can be covered thru California Fair Plan.
WHAT IS THE FAIR PLAN?
The California Fair Plan is an insurance pool which was created to make sure basic property insurance is available to people who own property in California and who, beyond their control, can’t get insurance thru other carriers due to wildfire exposure and high number of home insurance claims.
WHAT IS COVERED BY A CFP POLICY?
The California Fair Plan policy is a named peril policy meaning it covers damage from specific items. With a CFP policy, your home or property is insured if damaged by:
- Fire (including damage from a wildfire)
- Internal Explosion
Additional items that can be covered by this policy are damage from:
- Wind or Windstorm
- Riot or Civil Commotion
- Falling Aircraft
- Volcanic Eruption
For additional premium, you can also add coverage for:
- Extended Coverage
- Building Code Upgrades
- Vandalism/Malicious Mischief
- Debris Removal
- Personal Property: Including replacement cost so you are reimbursed for your items at current market value rather than their depreciated value (depreciated value = Actual Cash Value).
- Fair Rental Value: This is money to spend while you are living elsewhere while your house is being rebuilt or if you are a landlord this is loss of rental income.
- Trees & Foliage
- Other Structures such as Barns, Guest House, Driveways, Decks, Swimming Pool, Storage Shed, Tennis Courts, Water Tanks, Carports, Detached Garages, Kennels, Horse Stables, etc.
- Outdoor radio and TV Equipment, Awnings and Signs
HOW DOES A DIFFERENCE IN CONDITIONS (DIC) POLICY or WRAP INSURANCE WORK WITH A FAIR PLAN POLICY?
As stated above, the California Fair Plan provides coverage for fire, wildfire, lightning, internal explosion and smoke.
A CFP policy DOES NOT cover losses due to theft, burglary, liability and bursting of pipes. To complete a California Fair Plan policy and “fill in the missing gaps,” we HIGHLY recommend you purchase a DIC (Difference in Conditions) also known as a Wrap policy.
DIC policies are reasonably priced and give you a lot of bang for your buck!
A DIC policy can cover:
- Bursting pipes and accidental discharge/overflow of water or steam:Water claims are the #1 reason home insurance claims are made. Water damage can quickly cost thousands of dollars. For this coverage alone, a DIC policy is priceless!
- Liability: This covers you if someone gets hurt on your property, if you accidentally hurt someone, and/or if your pet hurts another person/animal. This coverage follows you at and away from home.
- Theft: Not only are items in your home covered from theft, but items stolen away from home or from your car are also covered.
- Medical Payments to Others: Covers costs associated with injuries that happen to guests in your home, regardless of who is at fault.
- Falling Objects: Such as trees falling on your roof.
- Weight of Ice, Snow or Sleet
- Freezing of pipes
- Trees, Shrubs and other plants
A CFP policy is a great option for homes in California wildfire areas. Bundled with the DIC/Wrap policy, property owners can have complete coverage such as the coverage you’d have from a traditional home insurance policy.
HOW DO INSURANCE COMPANIES DETERMINE IF A HOME IS IN A WILDFIRE AREA?
Insurance carriers look at several factors to decide if your home is in a high brush or wildfire area. They are:
- Ease of a firetruck to reach your home. If your property isn’t easy to get to or can’t be seen from a public street, you may be considered a “high or ineligible risk.”
- Your home’s location in relation to wind patterns.
- Distance to a fire hydrant.
- Number of wildfires in your area.
- Your home’s distance from a RESPONDING (not volunteer) fire station.
- The slope and elevation of your land.
- Your roof.
- Overgrown vegetation around your home.
- Your home’s distance to brush.
- Your Fireline Score.A score is given to your home which is based on the density of brush surrounding your property, the slope your home sits on and ease of accessibility of your home. Many insurance carriers don’t want to insure a home over a Fireline Score of 3. It becomes increasingly difficult to find traditional home insurance with a Fireline score of 6+. A Fair Plan policy combined with a DIC/Wrap policy is a great option for homes with a Fireline Score over 6.
- PPC or Public Protection Classificationis based on a scale of 1-10 (low risk to high risk). The PPC score is an indication of your property’s distance from a fire station and hydrant.
WHY AM I BEING DROPPED WHEN THERE HASN’T BEEN A WILDFIRE IN MY AREA?
Decades ago, a large fire was 15,000 acres. During this time, wildfires were rare and didn’t cause massive amounts of damage. Home insurance carriers would insure homes all throughout California without much concern for wildfire risk.
Today, the number and severity of wildfires has increased significantly. It’s not uncommon for a wildfire to burn over 100,000 acres, damaging hundreds, if not thousands of homes. Damage to one home could easily reach $300,000. Multiply $300,000 by 100 homes and that’s a BIG payout for an insurance carrier. When property owners are paying an average of $1500-$2000 per year to insure their home, but insurance carriers are on the hook for $300,000+ to pay a claim, the odds are not in the insurance carrier’s favor (especially in wildfire areas).
Keep in mind, home insurance doesn’t just cover damage from fires and wildfires. Damage water causes after a pipe bursts and dog bites or injuries your dog causes, are also covered. Water damage and dog incidents account for many home insurance claims. Combine the cost of these claims with damage from wildfires and it’s almost impossible for an insurance carrier to be profitable.
HELP! I’M CLOSING ESCROW AND CAN’T FIND HOME INSURANCE OR REASONABLY PRICED HOME INSURANCE
Einhorn Insurance specializes in escrow closings. We work as efficiently as possible to meet the strict time frames set by your purchase contact, escrow and your lender. If you need a policy thru the California Fair Plan, we can often provide proof of insurance that day or within 1 business day assuming we have all the information to do a quote to provide an Evidence of Insurance to your lender and escrow.
Einhorn Insurance will work directly with your lender and escrow so you don’t have to. Additionally, we can often provide a policy that meets your lender’s debt to income ratio requirements allowing you to qualify for a loan.
CONTACTING EINHORN INSURANCE
If you’ve been sent a non-renewal notice or your home insurance rates have gone thru the roof, Einhorn Insurance can help.
Einhorn Insurance is an insurance broker that provides property owners quotes and policies thru California Fair Plan (CFP). We specialize in insuring homes, second homes, income properties (landlords), condos, townhomes, vacant properties, trailer homes, mobile/manufactured homes and renters in wildfire areas.