California FAIR Plan + DIC Insurance, Explained by a Roseville Agent

What the California FAIR Plan is

The California FAIR Plan (Fair Access to Insurance Requirements) is a state-created, privately funded insurance pool. Every insurer licensed to write property insurance in California is required to participate and share its losses. It exists so that a home the regular market refuses can still get basic fire coverage.

Two things follow from that:

• It is designed to be temporary. The FAIR Plan's own rules say you should be there only when you cannot get coverage from a regular insurer, and it runs a program to move policyholders back to the private market when a carrier will take them.
• It is a dwelling fire policy, not a homeowners policy. The form is named-peril: it pays only for the causes of loss it lists.

What a FAIR Plan dwelling policy covers

The base residential policy covers four perils: fire, lightning, internal explosion and smoke. That is the whole list.

For an additional premium you can add:

• Extended coverage — windstorm or hail, explosion, riot or civil commotion, aircraft or vehicles, volcanic eruption.
• Vandalism and malicious mischief.
• Replacement cost on the dwelling — by endorsement only. Without it, the FAIR Plan settles a total loss at actual cash value (depreciated), and even with it there is an 80% insurance-to-value condition. This one matters more than any other checkbox on the policy.

Residential coverage is capped at $3,000,000 combined for the dwelling, other structures, contents and fair rental value. Above that, the FAIR Plan alone cannot insure the property to value.

What the FAIR Plan does not cover

• Personal liability — someone injured on your property, a dog bite, a lawsuit.
• Medical payments to others.
• Theft.
• Water damage — burst pipes, a failed water heater, an overflowing tub. In the Sacramento region this is the most common homeowners claim.
• Loss of use / additional living expense beyond the limited fair-rental provision.
• Falling objects, weight of ice or snow, freezing, accidental electrical damage and the other "broad form" perils a standard policy includes.
• Flood and earthquake (these are separate everywhere, but people are often surprised the FAIR Plan does not quietly include them).

If your only policy is the FAIR Plan, a $15,000 water leak, a stolen bicycle collection or a guest's broken ankle is entirely out of pocket.

What a DIC policy is and why it exists

A difference in conditions (DIC) policy — sometimes called a "wrap-around" or "companion" policy — is a second policy from a different insurer that is written specifically to sit on top of a FAIR Plan policy. It covers the perils the FAIR Plan excludes: liability, medical payments, theft, water damage, loss of use, and usually the rest of the broad-form perils. It excludes fire, because the FAIR Plan is handling fire.

FAIR Plan + DIC together approximate a standard homeowners policy. Approximate is the right word: the two policies have different insurers, different deductibles, different claims departments, and the DIC will not fix a FAIR Plan dwelling limit that is too low or a policy settling at actual cash value.

DIC policies in California are written by a handful of admitted carriers and by non-admitted (surplus lines) carriers. Availability and price move around a lot, which is one reason to buy the DIC through an agency that quotes several of them rather than one.

Will my mortgage lender accept the FAIR Plan?

Usually yes, with conditions. Lenders require the dwelling to be insured against fire for at least the loan balance (or replacement cost), with the lender named as mortgagee and no lapse in coverage. A FAIR Plan policy satisfies the fire piece. Many lenders and most closing agents also want to see liability and the broad-form perils, which is where the DIC comes in. Some servicers ask for FAIR Plan plus DIC as a matter of policy; a few accept FAIR Plan alone. The safe answer for a closing is to send the lender both declarations pages together.

Where FAIR Plan causes real trouble at closing is dwelling limit: if the home's replacement cost is above the $3,000,000 cap, or the FAIR Plan quote comes back with a limit below what the lender needs, the deal stalls. That is a case for a non-admitted homeowners policy rather than FAIR Plan at all (see below).

The 2026 FAIR Plan rate increase

In May 2026 the California Department of Insurance approved a 29.1% average rate increase for FAIR Plan residential policies — the FAIR Plan had asked for 35.8%. It applies at each policy's first renewal on or after October 15, 2026. "Average" is doing a lot of work in that sentence:

• The increase is concentrated in the wildfire portion of the premium, so homes with higher wildfire scores see larger increases. Roughly half of policyholders are expected to see increases in the 30% to 50% range, and a smaller group considerably more.
• Some lower-risk properties will see decreases.
• It is the first statewide FAIR Plan increase since 2023 (15.7%), and the FAIR Plan is required to file new rates at least every two years, so this is not the last one.

If you are on the FAIR Plan, your renewal notice from October onward is the moment to re-shop. Not because the FAIR Plan is bad at what it does, but because the price gap between FAIR Plan + DIC and a real homeowners policy has narrowed or reversed for a lot of homes.

FAIR Plan + DIC versus a regular homeowners policy

A standard HO-3 (or HO-5) policy covers the dwelling on an open-peril basis — everything except what is specifically excluded — with liability, medical payments, contents, loss of use and water damage built in, one deductible, one insurer, one claims adjuster. Replacement cost on the dwelling is standard.

Compared with FAIR Plan + DIC, a homeowners policy is almost always better coverage. Whether it is cheaper depends on the home. Over the last two years two things changed:

1. Several admitted carriers reopened for new California business under the state's Sustainable Insurance Strategy and are using parcel-level wildfire models, which means a well-maintained home in a higher-risk ZIP can score acceptably.
2. The non-admitted (surplus lines) market for California homes grew substantially. These carriers are not bound by the admitted rate filings, write wildfire-exposed homes on purpose, and offer full HO-3-style coverage — usually at a higher premium than an admitted carrier would have charged five years ago, but frequently at or below what FAIR Plan + DIC now costs.

How we get people off the FAIR Plan

We are an independent agency. For a FAIR Plan home we run the same process every time:

1. Admitted carriers first. We quote every admitted carrier we represent that is currently accepting new California homes. If one will take the property, that is normally the best outcome: full coverage, state-guaranteed, and eligible for the FAIR Plan's own transfer program.
2. Non-admitted homeowners carriers second. If no admitted carrier will write it, we quote several surplus lines carriers that specialize in wildfire-exposed California homes. These are full homeowners policies, not fire-only policies.
3. FAIR Plan + DIC last. If the home genuinely has no other market — very high brush score, unresolved roof or defensible-space issues, unusual construction — we keep the FAIR Plan and put the right DIC behind it, with dwelling replacement cost checked and the limit set to a real reconstruction estimate.
4. Re-shop every renewal. Carrier appetite in California changes quarter to quarter. A home that was FAIR-Plan-only last year often is not this year.

What we need from you to start: the FAIR Plan declarations page, the DIC declarations page if you have one, the roof year, and recent photos of the home and the space around it. Most quotes come back within one business day. If staying on the FAIR Plan really is the best option, we will say so.

Things that improve your odds of leaving the FAIR Plan

• Roof. Age and material are the first thing every carrier looks at. A Class A roof under 15 years old opens doors.
• Defensible space. Five feet of noncombustible zone around the foundation, trees limbed up, no wood piles against the house, gutters clear. Take dated photos.
• Ember-resistant vents and enclosed eaves where the home is in a Fire Hazard Severity Zone.
• A recent replacement-cost estimate. Carriers decline homes that look under-insured as often as they decline them for brush.
• Fixing the small stuff. Old water heater, missing handrails, an unpermitted addition, a trampoline. These get a policy declined before the underwriter even gets to wildfire.