California Property & Casualty Broker-AgentMiscellaneousEasy
A property owner is unable to obtain property insurance from the voluntary market for their dwelling located in a high fire risk area of California. Which program is designed to provide insurance for such properties when they are considered 'uninsurable' in the standard market?
- ACalifornia Earthquake Authority (CEA)
- BFair Access to Insurance Requirements (FAIR) Plan
- CCalifornia Automobile Assigned Risk Plan (CAARP)
- DNational Flood Insurance Program (NFIP)
Show answer & explanationAnswer & explanation
Correct answer: B. Fair Access to Insurance Requirements (FAIR) Plan
The FAIR Plan (Fair Access to Insurance Requirements) is a state-mandated program that provides basic property insurance for properties in high-risk areas or those unable to obtain coverage in the voluntary market.
Why the other options are wrong
- A. CEA provides earthquake insurance, not general property insurance for fire risk.
- C. CAARP provides auto insurance for high-risk drivers, not property insurance.
- D. NFIP provides flood insurance, not general property insurance for fire risk.
Fair Access to Insurance Requirements (FAIR) Plan
A program created to provide basic property insurance to consumers who cannot obtain coverage in the voluntary insurance market, often due to high-risk locations or other underwriting reasons.
- State-mandated, industry-backed program.
- Provides coverage for dwellings, commercial properties, and farms.
- Coverage is typically basic fire and extended perils, not comprehensive.
Memory trick: FAIR for properties, CAARP for cars, CEA for quakes, NFIP for floods.