Many California homeowners are surprised to learn that when they purchase a California FAIR Plan policy, they may also need a Companion Policy, sometimes called a Difference In Conditions (DIC) Policy.
If you’re shopping for insurance in Orange County, Los Angeles County, Riverside County, San Bernardino County, San Diego County, or any wildfire-prone area in California, understanding the difference between these policies is extremely important.
What Is the California FAIR Plan?
The California FAIR Plan was created to provide basic fire insurance coverage to homeowners who cannot obtain insurance through traditional insurance companies.
Many homeowners turn to the FAIR Plan after:
- Home insurance non-renewals
- Wildfire exposure concerns
- High brush hazard locations
- Insurance company underwriting restrictions
The FAIR Plan is often considered California’s insurer of last resort.
👉 Learn More About California FAIR Plan:
https://www.starwestinsurance.com/ca-fair-plan
What Does the FAIR Plan Cover?
The FAIR Plan primarily provides protection for:
✅ Fire
✅ Lightning
✅ Internal Explosion
Depending on the policy selected, additional limited coverages may be available.
However, many homeowners mistakenly believe the FAIR Plan provides the same protection as a traditional homeowners insurance policy.
It does not.
What Doesn’t the FAIR Plan Cover?
A FAIR Plan policy generally does not provide many of the coverages found in a standard homeowners policy, including:
❌ Personal Liability
❌ Medical Payments to Others
❌ Water Damage from Plumbing Leaks
❌ Theft Coverage (in many situations)
❌ Personal Injury Claims
❌ Loss Assessment Coverage
❌ Broader Homeowners Coverage
Without these coverages, homeowners could face significant out-of-pocket expenses after a loss.
What Is a Companion Policy?
A Companion Policy, often called a Difference In Conditions (DIC) Policy, works alongside your FAIR Plan policy to help fill important coverage gaps.
Think of it this way:
FAIR Plan
Provides basic fire insurance.
Companion Policy
Provides many of the coverages commonly found in a traditional homeowners insurance policy.
Together, they can help create a more complete insurance package.
What Does a Companion Policy Typically Add?
Depending on the insurance company and policy form, a Companion Policy may provide:
Personal Liability Coverage
Protects you if someone is injured on your property and files a lawsuit.
Example:
A guest slips and falls at your home and sues you for medical expenses.
Water Damage Coverage
Many companion policies provide protection for sudden and accidental water damage.
Example:
A pipe bursts inside your home causing significant interior damage.
Theft Coverage
Protection for personal property losses resulting from theft.
Loss of Use Coverage
Provides temporary living expenses if your home becomes uninhabitable after a covered loss.
Medical Payments Coverage
Provides limited medical coverage for guests injured on your property.
Additional Homeowners Protections
Coverage varies by carrier and policy form.
Why Do Mortgage Lenders Often Require a Companion Policy?
Most mortgage lenders want coverage that closely resembles a standard homeowners insurance policy.
Because the FAIR Plan alone may not provide liability coverage and other important protections, lenders frequently require a Companion Policy to satisfy their insurance requirements.
Without the companion policy, you may not meet lender guidelines.
Is a Companion Policy Worth It?
In most situations, yes.
While adding a Companion Policy increases the overall insurance cost, it may provide critical protections that many homeowners assume they already have.
Without a companion policy, a homeowner could be exposed to:
- Liability lawsuits
- Water damage losses
- Theft claims
- Additional living expenses
These losses can easily exceed the cost of the policy itself.
Who Needs a FAIR Plan and Companion Policy?
You may need a FAIR Plan package if:
- Your insurance company non-renewed your policy
- Your home is located in a high wildfire area
- Traditional carriers declined coverage
- Your property is in a brush hazard zone
- You’re purchasing a home that standard insurers will not accept
Why Work with a FAIR Plan Specialist?
Not all insurance agents regularly handle FAIR Plan policies.
At Starwest Insurance Services, we help homeowners throughout California secure:
- California FAIR Plan Policies
- Companion (DIC) Policies
- Homeowners Insurance
- Condo Insurance
- Landlord Insurance
- Earthquake Insurance
- Umbrella Insurance
We can review your property, lender requirements, and available insurance options to help ensure you have the protection you need.
👉 Learn More:
https://www.starwestinsurance.com/about-us
Need Help With a FAIR Plan Policy?
If you’ve been non-renewed, are buying a home, or need help understanding your FAIR Plan coverage, we’re here to help.
James C.Q. Banh
Starwest Insurance Services, LLC
📞 Office: (714) 893-7271
📱 Text: (714) 867-7799
🌐 Home Page:
https://www.starwestinsurance.com
🌐 Request a Quote:
https://www.starwestinsurance.com/insurance-quote
No Broker Fees Since 1995 • California FAIR Plan Specialists • Multiple Insurance Carriers
Contact us today for a free review of your FAIR Plan and Companion Policy options.