California Property & Casualty Broker-AgentMiscellaneousMedium
A coastal property owner in California has been unable to obtain property insurance for their beach house through standard insurance markets due to its proximity to the ocean and high brush fire risk. They meet all eligibility criteria for the Fair Access to Insurance Requirements (FAIR) Plan. What type of perils would this property owner typically be able to secure coverage for through the California FAIR Plan?
- AFire, vandalism, and other extended coverage perils.
- BFlood, earthquake, and windstorm only.
- COnly liability coverage for third-party bodily injury.
- DComprehensive coverage, including liability and theft.
Show answer & explanationAnswer & explanation
Correct answer: A. Fire, vandalism, and other extended coverage perils.
The California FAIR Plan is designed to provide basic property insurance for those unable to obtain it in the voluntary market. It typically covers perils like fire, extended coverage (windstorm, hail, explosion, riot, etc.), and vandalism/malicious mischief, but not flood, earthquake, or comprehensive liability.
Why the other options are wrong
- B. Flood and earthquake are typically excluded from FAIR Plan policies and require separate coverage.
- C. The FAIR Plan primarily offers property coverage, not liability coverage.
- D. Comprehensive coverage (like an HO-3 policy) and liability are generally not available through the FAIR Plan, which offers basic property coverage.
California FAIR Plan Perils
The California FAIR Plan provides basic property insurance for those unable to obtain it in the voluntary market, covering perils such as fire, extended coverage, and vandalism.
- Market of last resort for property insurance
- Covers basic perils: Fire, Extended Coverage, Vandalism
- Does NOT cover flood, earthquake, or liability
Memory trick: FAIR Plan is for FIRE, Wind, and VANDALS, not floods or big scandals.