As wildfires, underwriting restrictions, and insurer withdrawals reshape the California homeowners market, many residents—particularly in higher-risk areas—are turning to the California FAIR Plan as their only available fire insurance option. While the FAIR Plan can be a crucial backstop when standard insurers decline coverage, relying on it alone is a significant risk. The key to protecting your home and financial stability is understanding how to properly pair the FAIR Plan with a Difference in Conditions (DIC) policy—and why the type of carrier you choose for that DIC coverage matters.
What the FAIR Plan Covers—And What It Doesn’t
The California FAIR Plan offers named peril fire coverage only. It does not include liability protection, theft, water damage, personal property coverage, or loss of use—benefits that most homeowners take for granted under a standard homeowners policy (HO-3 or HO-5). Without a DIC policy to supplement the FAIR Plan, homeowners are dangerously underinsured.
The Importance of a Companion DIC Policy
A DIC policy fills in these gaps by providing the broader protections a traditional homeowners policy would offer. It covers things like:
Personal liability lawsuits
Theft or vandalism
Loss of use (temporary housing if your home becomes uninhabitable)
Water damage (from burst pipes, for example)
Coverage for personal belongings
This two-policy approach—FAIR Plan + DIC—has become a necessary workaround in many parts of California, but the source of the DIC policy matters greatly.
Admitted vs. Surplus (Non-Admitted) DIC Carriers
Many homeowners are unaware they have a choice between admitted and non-admitted (surplus lines) carriers for DIC coverage. This distinction has real implications:
Admitted Carriers are licensed and regulated by the California Department of Insurance. They must comply with state rules on policy forms, rates, and claims handling. Most importantly, if they become insolvent, the California Insurance Guarantee Association (CIGA) may provide some claim protections.
Non-Admitted (Surplus Lines) Carriers, on the other hand, are not licensed by the state, even if they are allowed to operate in the surplus lines market. They are not backed by CIGA and have more flexibility in pricing and underwriting—but that also means fewer consumer protections and often more complex claims processes.
While non-admitted DIC carriers have played an important role in high-risk markets, homeowners should seek admitted options whenever available. In many cases, there are admitted insurers still offering DIC policies, especially through experienced brokers who specialize in challenging California risks.
Why Relying on the FAIR Plan Alone Is Risky
Choosing only the FAIR Plan without a DIC policy leaves you without:
Personal liability protection
Coverage for most common perils
Protection for your personal property
Reimbursement for loss of use
This gap can expose homeowners to financial ruin after even moderate losses unrelated to wildfire or fire damage.
Final Thoughts
If you’re relying on the FAIR Plan, it’s not enough. Partner with a knowledgeable broker like CauseWell Insurance Services to ensure you’re pairing it with a solid DIC policy—preferably from an admitted carrier. This layered approach offers the peace of mind every California homeowner deserves.
