The California FAIR Plan is a fire policy, not a homeowners policy. If you have the FAIR Plan and think you're fully covered, you're not — there are significant gaps that leave most policyholders exposed on water damage, theft, liability, and more.
The California FAIR Plan is a fire-focused policy. It covers your dwelling structure for direct physical loss from fire, smoke, lightning, and internal explosion. That's substantially narrower than a standard HO-3 policy, which covers your home for all risks except those specifically excluded.
In plain terms: the FAIR Plan was designed to get fire coverage to homeowners who can't get it in the voluntary market — not to replace full homeowners insurance. Created under California Insurance Code §10095, the Plan is a last-resort mechanism, not a comprehensive solution. Understanding this distinction can save you from a very painful surprise at claim time.
What the FAIR Plan does cover:
What the FAIR Plan does not cover by default:
Have the FAIR Plan and wondering what you're missing? Our agents at three California offices can review your current coverage and place a DIC policy to fill the gaps — often the same day.
Call 209-670-1556 Get a QuoteThese are the five exclusions that catch FAIR Plan policyholders most off guard — because they're the most common types of homeowner claims in California.
A burst pipe, an appliance leak, rain intrusion through a damaged roof — all of these are excluded from the FAIR Plan. Water damage is the single most common homeowners claim nationally, and it is completely absent from your FAIR Plan coverage.
If someone breaks into your home and steals your belongings, the FAIR Plan provides no coverage. Your TV, jewelry, tools, and personal items are all unprotected unless you've separately endorsed the policy for personal property and vandalism — and even then, theft is excluded.
If a visitor slips and falls on your property and sues you, the FAIR Plan offers zero protection. Personal liability coverage — typically $100,000 to $300,000 in a standard HO-3 — is not included. This exposure alone makes the case for adding a DIC policy compelling for any homeowner.
If a wildfire damages your home enough that you can't live there during repairs, where do you stay? The FAIR Plan does not pay for temporary housing, meals, or increased living costs while your home is being rebuilt. ALE coverage — often 20–30% of your dwelling value in a standard policy — is entirely absent.
California is earthquake country. The FAIR Plan does not cover earthquake damage to your structure. Earthquake coverage requires a completely separate policy — either through the California Earthquake Authority (CEA) or a private earthquake insurer. This gap exists even if you add a DIC policy; earthquake is typically a separate purchase.
A DIC (Difference in Conditions) policy is a surplus-lines wrapper that covers the perils the FAIR Plan excludes — primarily water damage, theft, vandalism, personal liability, additional living expenses, and sometimes earthquake. Together, FAIR + DIC approximate the coverage of a standard homeowners policy.
DIC policies are not sold through the standard (admitted) insurance market. They are surplus-lines products, meaning the carrier is not admitted in California but is eligible to write coverage through a licensed surplus-lines broker. This matters because it means not every insurance agent can place a DIC policy — you need a broker with surplus-lines market access and the carrier relationships to place it.
The DIC policy is structured to cover the gaps between what the FAIR Plan covers and what a standard HO-3 would cover. You submit claims to each carrier separately depending on the cause of loss — the FAIR Plan handles fire claims, the DIC handles everything else it covers.
| Coverage Type | FAIR Plan Only | FAIR Plan + DIC |
|---|---|---|
| Fire and wildfire | ✅ Covered | ✅ Covered |
| Smoke damage | ✅ Covered | ✅ Covered |
| Lightning | ✅ Covered | ✅ Covered |
| Water damage (burst pipe, rain intrusion) | ❌ Not covered | ✅ Covered (DIC) |
| Theft | ❌ Not covered | ✅ Covered (DIC) |
| Vandalism | ❌ Not covered (unless endorsed) | ✅ Covered (DIC) |
| Personal liability | ❌ Not covered | ✅ Covered (DIC) |
| Additional living expenses (ALE) | ❌ Not covered | ✅ Covered (DIC) |
| Medical payments to guests | ❌ Not covered | ✅ Covered (DIC) |
| Personal property (belongings) | ❌ Limited / optional add-on | ✅ Covered (DIC) |
| Earthquake | ❌ Not covered | ❌ Separate policy required |
| Flood | ❌ Not covered | ❌ Separate policy required |
"The FAIR Plan covers fire. Your mortgage lender cares about everything else — that's what DIC is for."
DIC premiums are not a fixed number — they vary significantly based on the location, rebuild value, deductible choice, and the specific carrier writing the coverage. Across our three California offices, most FAIR Plan clients pay DIC premiums in the range of $800–$2,400 annually depending on location, rebuild value, and deductible choice — adding roughly 30–60% to the FAIR Plan premium alone.
Factors that drive DIC cost up or down:
A licensed broker can run the numbers for your specific address. The total combined premium for FAIR Plan + DIC is often less than clients expect — and substantially less than being underinsured at claim time.
DIC policies are surplus-lines products, which means they are written by non-admitted carriers through a licensed surplus-lines broker. In California, carriers active in this market include Chubb, American Strategic Insurance, and various Lloyd's syndicates, among others. The market evolves — a broker with active surplus-lines relationships will know who is competitive for your property's profile at any given time.
This is meaningfully different from calling a captive agent or a carrier that already declined to write your standard homeowners policy. Those carriers aren't in the surplus-lines DIC market. Via Rapida Services places DIC coverage through the surplus-lines market — if you've been turned away elsewhere for a DIC quote, call us at 209-670-1556.
Lee la versión completa en español de esta guía: ¿Qué no cubre el Plan FAIR de California? — La póliza DIC explicada
No. The California FAIR Plan does not cover water damage of any kind — not from a burst pipe, not from rain intrusion, not from an appliance leak. Water damage is one of the most common homeowners claims, and it is entirely excluded from the FAIR Plan. A DIC (Difference in Conditions) policy adds water damage coverage.
Most homeowners with a mortgage do. Lenders typically require coverage equivalent to a standard homeowners policy, and the FAIR Plan alone does not meet that standard — it lacks liability, water damage, theft, and additional living expenses. A DIC policy wraps around the FAIR Plan to fill those gaps and usually satisfies the lender's requirement.
No. DIC policies are surplus-lines products, which means they are not sold through the standard insurance market. You need a broker who holds a surplus-lines license and has market access to carriers that write DIC in California. Not all insurance agents have this access — verify before you ask for a quote.
Usually not. Most mortgage lenders require hazard insurance that covers perils beyond just fire — including liability and typically water damage. The FAIR Plan alone is a fire policy only. Most lenders will require you to add a DIC policy or equivalent coverage. Confirm your lender's specific requirements before binding coverage.
Our licensed agents place FAIR Plan + DIC coverage across all 58 California counties — from three offices: Stockton, San Jose, and San Rafael.