What Is Fair Plan Homeowners Insurance?
Created in response to the U.S. Housing and Development Act of 1968, FAIR (Fair Access to Insurance Requirements), homeowners' insurance plans help ensure coverage of "high risk" properties that may be difficult to insure under conventional plans. Although most U.S. states have created a FAIR plan, not all states offer this type of coverage.
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What Constitutes High Risk?
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Homes that are typically considered risky by insurance companies include homes in areas prone to severe weather such as hurricanes or tornadoes, homes in high-crime neighborhoods and homes with older plumbing, electrical or heating systems, which carry a higher fire risk.
Price
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Typically, FAIR plans are more expensive than insurance plans for lower risk properties, but these plans include coverage that cannot otherwise be obtained.
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Coverage
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Coverage varies from state to state, depending on what's considered a risk in that area. For instance, hurricane-prone states such as Florida offer beach and windstorm plans that protect against hurricanes. All FAIR plans protect against losses due to fire, vandalism, riot and windstorm.
Requirements
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To obtain a FAIR plan, homeowners must make improvements to their home to mitigate risk. For instance, owners of older homes may have to replace outdated electrical wiring to reduce the risk of fire. Homeowners can be denied insurance if these improvements are not made as promised.
Applying for FAIR Plan Insurance
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FAIR plans can be obtained through insurance agents authorized to issue FAIR plans. Check with your state's FAIR plan association to find authorized agents.
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References
- Photo Credit Image by Flickr.com, courtesy of Jeff Turner
