California FAIR plan offers fire coverage for uninsurable people – NBC Los Angeles
As families from 900 homes remain evacuated and homes and cars melt to the frame due to the Coastal Fire in Laguna Niguel, some may check their homes’ wildfire insurance coverage and ask if there are other options, like the California FAIR plan.
The 200-acre blaze on Friday destroyed around 20 homes and left 11 others damaged, with just 25% of the blaze under control.
A UC Davis study said 2020 was the first year that burned areas across the state of California reached the burning rates seen before the 1800s. Some 4.3 million acres burned in 2020. In the 1800s, 3 to 4 million acres would burn in an average year, according to the study.
The ravenous wildfires have also worsened in California. In the past five years, 12 fires have scorched a “swath of land the size of Connecticut,” NASA and CalFire reported.
Forest fire insurance
First, anyone who finds themselves in the line of fire or just wants to make sure their home is covered should review their wildfire insurance.
Navigating the process of filing a claim can be stressful and confusing.
With an insurance claim, speed is key.
The faster you deposit, the faster you get paid.
Document your losses
Insurance companies will want to see proof of damage to your home and property.
Take pictures of everything.
If you have receipts for recent purchases, keep them.
Here’s how to prepare before a fire spreads through your neighborhood
Before a disaster strikes, take photos of your possessions in every room of your home and keep these images in a safe place. In the event of a fire, you can prove to the insurance company what you have lost.
Make sure you have enough cover.
Review your home insurance policy.
Nicole Ganley, who works with an insurance industry trade group, says many people are underinsured. There is a shortage of wood, thanks to sawmills that have been closed or put on hiatus during the pandemic. Added to this is the demand for wood created by other natural disasters. These factors have caused the price of wood to skyrocket. That’s up 400%, says Ganley.
This means that rebuilding your home could now cost a lot more than your insurance will cover. So you’ll either have to shell out thousands of dollars in cash or rebuild a smaller house.
“Instead of rebuilding your 4-3, you have to rebuild a 3-2. And you don’t want to do that,” Ganley said.
She says to call your insurance agent and ask about “extended replacement cost coverage.”
Extended Replacement Cost Coverage will give you 150% coverage. This will give you more to cover this increase in demand, she said.
She also suggests tweaking your insurance policy to keep up with inflation and building code updates.
Ganley admits these policy changes will cost you a bit more, but she says it’s a small price to pay for peace of mind.
Ganley says a 10-minute phone call to your agent can be the difference between recovering or not being able to rebuild that house you’ve invested everything in.
But what happens when you don’t have adequate insurance? Or not at all because your insurer has dropped you?
Some policies for homes in fire-prone areas are not renewed.
This is where the California FAIR Plan comes in.
California FAIR Plan
The California FAIR Plan is not a state agency or public entity. If a traditional insurer fails to insure a high-risk property, the FAIR plan will provide basic cover and is described as a temporary safety net. Temporary is the key word. The plan will provide coverage until the property is insurable by a traditional company.
“The FAIR Plan is a syndicated fire insurance pool comprised of all insurers licensed to conduct property and casualty insurance business in California,” the website states.
But don’t expect low prices. Hedging will reflect risk, as will prices. Policies also tend to cover only the most catastrophic impacts of a fire.
“The number of consumers forced to obtain a FAIR Plan policy because they could not find an insurance company willing to underwrite coverage increased by 49,049 policies in 2020 to 241,466 new and renewal policies” , the Department of Insurance said in a news release. .
First in the process, you will find a broker who:
- Find available coverage from a traditional insurance company
- Determine your property insurance coverage needs
- Estimate the fair market value of your home
- Manage changes to your policy
- Answer your questions
You don’t have to pay the broker.
Then the broker will determine if you qualify.
The last step is to find coverage under the FAIR plan.
Click here to learn more about applying.
Christine Roher and Randy Mac contributed to this article.