Is FAIR Insurance - All there Is?

The State of California is going through a significant insurance crisis. The evidence for this is obvious. Almost weekly we are learning about another property insurer pulling out of the state or putting a moritorium in place.

For many this simply means that the Califonria FAIR plan may seem like the best option available. And...it may well be. However before you purchase that policy [or while you have it] it might be a good idea to reach out a different agent or broker. Not all Agents are equal.

After all some Agents have a few options and other Agents have a ton. Which one sounds better now?

What are Agents and What are Brokers?

The difference between brokers and agents in the insurance landscape is not that simple. But for general purposes Brokers may be thought of working with lots more insurance providers while agents work with a more specific insurer. Technically in California and in Insurance it is not at all that simple. Go ahead and ask any good California property producer if they are an agent or a broker and you are likely to be asked which insurer you are referring to....In reality most insurance producers are broker agents. What you really want to know though - Is How Many Insurers you work with?

Many California Insurance Salespeople have One main insurer that is the Insurer of First Refusal. Meaning that they cannot sell you another company - until their main company declines you. Orther Insurance Professionals, the so called Independent Agents - have no insurer with that right and work with dozens, scores, 50 or more insurers.

Back to the Original Point on CA FAIR and your Other Options:

During these uncertain insurance times - you may find some agents more useful than others.

As of the writing of this article, August of 2023, I routinely suggest that consumers check themselves with both USAA and AAA for admitted insurance options. [These being insurers that many independent agents don't have access to.]

However if both of those and other admitted options fail to materialize - than the FAIR plan may just be your best bet. However there are a cadre of other types of policies called nonadmitted policies. Simply put these are insurers that are not ruled and regulated by the California DOI. There are some restrictions here and differences - but they are typically written on the more common DP3 or HO3 Form than the DP1 combo with a DIC.

Nonadmitted policies should not be placed without at least 3 rejections from admitted insurers.

Which is Better FAIR or Nonadmitted:

There is no simple answer to this question. Sometimes the FAIR plan makes more sense while other times a nonadmitted policy is a far better deal. Often it comes down the the homes location and characteristics, and TIV. Sometimes it comes down to claims history or other somewhat odd underlying criteria.

What to Do:

I have said for decades sometimes its best to shop the agent - not the insurer. I routinely have discussions with other agents whereby I learn something and also get a feel for what the other agent is seeing. Just because a given agents main insurer is not accepting homes - does not mean that the FAIR is the best option for you and your family.

Scott W Johnson, is a Broker Agent based in the San Francisco Bay Area for Marindependent Insurance Services LLC. CA Lic 0H11625