If you live in California, chances are you've heard of the California FAIR Plan — often described as the "insurer of last resort." But what exactly is it? And how does it differ from traditional homeowners policies?
In a recent Insurance Hour broadcast, KarlSusman, independent broker and insurance expert witness, broke down the myths and realities surrounding the FAIR Plan — while also tackling another pressing issue for families: the rising cost and complexity of auto insurance.
This episode was classicSusman — equal parts education and empowerment — offering homeowners and drivers practical insights into how to stay covered and avoid costly mistakes.
One of Susman's first clarifications might surprise many:
"The California FAIR Plan isn't an insurer at all — it's an association," he explained.
The FAIR Plan (Fair Access to Insurance Requirements) was created in the late 1960s after a series of devastating urban riots and wildfires left thousands unable to obtain basic fire coverage. Rather than a state-run company, it's a joint association of all admitted insurance carriers in California.
Each insurer participates based on its market share — meaning if a company writes 10% of the homeowners business statewide, it's responsible for 10% of FAIR Plan premiums and claims.
So while the plan is administered centrally, it's actually backed by the collective strength of California's admitted insurance industry — not taxpayer funds.
And if a crisis pushes it beyond solvency, there's a backup system in place: the California Insurance Guarantee Association (CIGA). Since the FAIR Plan is part of this safety net, claims will still be honored even if the association runs out of funds.
"Effectively,"Susman noted, "you have all of the admitted insurance companies backing all of the admitted insurance companies."
At its core, the FAIR Plan provides basic fire insurance — protection for those who cannot obtain standard homeowners coverage.
But it covers more than most people realize. Reading directly from the policy,Susman outlined the included perils:
Fire or lightning
Smoke damage
