Why Does the FAIR Plan Plus a Wrap Cost More Than My Old Policy?

Because you're now buying two policies where you used to buy one, and both are priced for a home in a high fire area.

If your bill jumped when you moved to the California FAIR Plan and a wrap policy, you're not imagining it. We hear it every week. One client put it this way: "My fire insurance doubled this last year."

Darlene Baxter is a licensed California insurance agent and owner of Darlene Baxter Insurance Agency in Pleasant Hill, CA, helping homeowners, families and business owners get covered with real choices: their main company first, and other companies through the brokerage when it isn't the right fit. Her team sets up FAIR Plan and wrap policies together for homes in high fire areas.

The FAIR Plan by itself is about half of a homeowners policy. It covers fire, plus a short list of other damage depending on the options on your policy.

It leaves out a lot of what your old policy included: liability if someone gets hurt on your property, theft, and water from a burst pipe. The wrap policy fills those gaps.

So you have two separate policies from two separate companies, and you'll see two bills. Together they work much like the one policy you used to have. Our post on what a wrap policy is shows how the two fit.

Often it isn't about you. Every insurance company limits how many homes it will insure in one area. When a company reaches its limit in a high fire area, it stops renewing some of the homes there.

Your own record still matters. A homeowner with two claims in five years will have a very tough time finding a regular homeowners policy.

If the letter is new, our post on what to do when you're canceled or non-renewed walks through the first week.

It isn't the first choice, and we don't treat it like one. The FAIR Plan is California's insurer of last resort. It exists for homes that regular insurance companies won't take right now.

A lot of homeowners have told Darlene it feels like "the unfair plan." The frustration is fair. You're paying more to get back to where one policy used to take you.

What it does is keep your home insured, and keep your mortgage company satisfied, while the regular companies are saying no.

A few things are worth a conversation.

• Ask about discounts. "Are there any discounts missing?" is a fair question, and we check.
• Look at your deductibles. Choosing a higher deductible can lower the bill. It also means more out of your pocket if something happens, so we go through that trade with you.
• Take care of the property. Clearing brush and other fire-safety work can matter to insurance companies when they decide which homes to take.
• Don't drop the wrap to save money. With the FAIR Plan alone, a guest's injury, a burglary or a burst pipe would be yours to pay for.

We can't promise a price. Those decisions belong to the insurance companies.

Not necessarily. It depends on your home and on which companies are taking homes in your area at the time. New companies have been coming into California, and what's available changes from year to year.

We offer a review at every renewal. If a regular homeowners policy opens up for your home, you'll hear about it, and one policy can replace the two. The review step in our process shows how that works.

Darlene Baxter is a licensed California insurance agent and owner of Darlene Baxter Insurance Agency in Pleasant Hill, CA, helping homeowners, families and business owners get covered with real choices: their main company first, and other companies through the brokerage when it isn't the right fit.

If you're wondering why the FAIR Plan plus a wrap costs more than your old policy, and whether yours is set up right, call the office at (925) 940-6970 or send us a message. Tell us about your house. Our FAIR Plan and wrap policy page has the full picture.