By Carlo Narduzzi
Broker
Why Should You Avoid the California FAIR Plan?
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When it comes to fire insurance in the Kern County mountains, things have changed. In recent years, wildfires caused insurance companies to look more closely at homes located near brush. Today, many "big names" have stopped writing or renewing insurance policies in these areas.
I saw this trend coming several years ago. At the time, I represented a "big name" company. I knew I needed to start representing more than one company. This is one reason I left that company last year and started over as an independent broker. I now represent dozens of high quality insurance companies, including several "A" rated carriers who will write "ordinary" homeowner's policies in high brush areas. More often than not, their coverage is less expensive and always better than the FAIR Plan's bare bones, fire only policy.
What should you do if your policy is non-renewed? What if the only alternative your agent offers is the California FAIR Plan? First, you need to know what the FAIR Plan is - or more appropriately – what it isn't. Here's how the state's website (www.cfpnet.com) describes the FAIR Plan:
"The FAIR Plan issues insurance as a last resort, and should be used only after a diligent effort to obtain coverage in the voluntary market has been made. We recommend that all FAIR Plan policyholders shop for a different insurer at least annually in order to search for coverage that is more comprehensive than that offered by the FAIR Plan...." Their website further explains, "The FAIR Plan provides basic fire insurance coverage for residential and commercial structures, as well as personal property coverage for residential and business occupancies...."
The FAIR Plan is an expensive fire policy – that's all. In comparison, in addition to fire, an "ordinary" home insurance policy would include: wind, hail, falling objects, water damage, theft, freezing, medical payments and liability. If you have the FAIR Plan, you actually need to buy two additional policies. One for contents and another for liability coverage. This is on top of the FAIR Plan's already extreme cost.
Doing all you can to avoid the FAIR Plan will require the help of an independent broker. Someone who represents several insurance companies, not just one or two. Making "...a diligent effort to obtain coverage..." is worth the effort.
If your agent only represents a couple of companies and offers you the FAIR Plan, is it because they are out of options? There are circumstances where the FAIR Plan actually is, "a last resort." However, unless you contact an independent insurance broker, how can you be sure the FAIR plan is truly your last resort? It certainly pays to make some calls!
Please let me know if you have any questions.
Carlo Narduzzi, Broker - CA License: 0E29898
661-823-4893 - carlo@insurancetehachapi.com
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