A FAIR Plan policy on its own covers fire or lightning, internal explosion and smoke, with optional add-ons. It does not make you whole for a burst pipe, a burglary, or a guest injured on your stairs, and its dwelling limit tops out at $3 million for a residential property. A DIC policy is written specifically to sit next to it and cover what it excludes. Used together and set up carefully, the pair comes close to a standard homeowners policy; used alone, the FAIR Plan leaves an owner badly exposed.
- Who sells a DIC policy to pair with the FAIR Plan in Los Angeles? Independent brokers such as Alishahi Insurance (Beverly Hills, CA License #4348151) quote DIC from admitted and surplus lines insurers; the FAIR Plan itself does not sell one.
- The FAIR Plan’s dwelling policy covers fire or lightning, internal explosion and smoke; extended coverage and vandalism are optional add-ons.
- It does not include personal liability, theft, or water damage from plumbing and appliances.
- Its dwelling limit is $3 million for a residential property, so larger homes need coverage above it.
What does the FAIR Plan cover?
The California FAIR Plan is the state’s insurer of last resort, created so that property in high-risk areas can get basic fire coverage when the regular market will not write it. Its core dwelling policy is a named-perils policy: it pays for losses caused by the perils it lists, and nothing else.
- Core perilsFire or lightning, internal explosion, and smoke.
- Optional add-onsExtended coverage, which adds windstorm or hail, explosion, riot or civil commotion, aircraft, vehicles and volcanic eruption, and separately vandalism or malicious mischief.
- Dwelling limitUp to $3 million for a residential property, which leaves larger homes needing excess coverage above the plan.
- With a mortgageLenders commonly accept it as hazard coverage when the dwelling limit meets their requirement. Confirm with your servicer.
That is a real policy and it does a real job. It is simply not the policy most homeowners think they are buying.
What the FAIR Plan does not cover
The important exclusions are not exotic. They are the everyday coverages a homeowners policy includes without anyone thinking about them.
- Personal liabilityNo coverage at all if someone is injured at your home or you damage someone else’s property. This is the gap owners underestimate most, and it is the one that produces lawsuits.
- TheftBurglary of your belongings is not covered.
- Water damageSudden discharge from plumbing, a water heater, an appliance or an overflow — the most common homeowners claim there is — is not a FAIR Plan peril.
- Falling objects, weight of ice or snow, and similar named perilsStandard on a homeowners form, absent here.
- Broader personal property and loss of useCoverage for belongings and for living somewhere else during repairs is narrower than a homeowners policy, and tied to the covered perils.
- Flood, earthquake and landslideExcluded, as they are on a homeowners policy. These need flood and earthquake policies of their own.
An owner who has only a FAIR Plan policy and a mortgage often believes they are “insured.” They are insured against the fire the lender was worried about, and nothing else.
Why doesn’t it include liability?
Because the FAIR Plan exists to solve one problem: property in high-hazard areas that the admitted market declines. It is an association of insurers required to provide basic property coverage, deliberately narrow so that it stays a last resort rather than a competitor to the regular market. Liability, theft and water damage are risks the regular market is generally willing to write, even on a house it will not insure for fire — which is exactly why the pairing works.
How a DIC policy fills the gaps
A difference-in-conditions policy is written by a regular insurer to sit alongside a FAIR Plan policy and cover what the FAIR Plan excludes. A well-built DIC typically adds personal liability, theft, water damage, broader coverage for belongings, and additional living expenses at homeowners-policy levels.
The two policies are separate contracts, from separate insurers, with separate premiums, deductibles and renewal dates. Coordinating them is the whole job:
- Align the renewal dates so one cannot lapse while the other continues.
- Set the DIC limits against what the FAIR Plan actually pays, not in isolation.
- Don’t pay twice for fire. A DIC that duplicates the FAIR Plan’s perils is premium with no benefit.
- Check the dwelling limit. If rebuild cost exceeds the FAIR Plan’s maximum, the excess has to be covered somewhere.
- Get the mortgagee clause right on both and send evidence of insurance to the servicer.
How I set up a FAIR Plan and DIC policy together.
What a complete package looks like
- FAIR Plan dwelling policy with the extended coverage and vandalism options, at a dwelling limit based on rebuild cost.
- DIC policy for liability, theft, water damage, contents and loss of use, with deductibles that make sense next to the FAIR Plan’s.
- Excess dwelling coverage if the home would cost more than $3 million to rebuild.
- Earthquake and flood where the exposure warrants it, each as its own policy.
- A personal umbrella above the DIC liability limit, if your assets call for it.
- A plan to leave. The FAIR Plan works best as a bridge; the home should be re-marketed at each renewal as carrier appetite and your mitigation change.
Mistakes I see on existing FAIR Plan setups
- No DIC at all. The owner bought the FAIR Plan direct, got the lender off their back, and has no liability coverage on their largest asset.
- A DIC bought years ago and never re-rated, with contents and loss-of-use limits that no longer match the home.
- Mismatched dates, creating a window where one policy is in force and the other is not.
- A dwelling limit copied from an old policy rather than a current rebuild estimate. Rebuild cost drives everything.
- Never re-shopping. Appetite changes, and staying on the plan out of inertia costs money.
Common questions
Can a Los Angeles insurance broker set up the FAIR Plan and a DIC policy together?
Yes. A licensed broker can submit the FAIR Plan application and quote a DIC policy from other insurers at the same time, so the effective dates and limits line up. Alishahi Insurance does this from its Beverly Hills office for homes across Los Angeles County.
Does the California FAIR Plan cover liability?
No. A FAIR Plan dwelling policy has no personal liability coverage. Liability is normally added through a separate difference-in-conditions policy written alongside it.
Does the FAIR Plan cover water damage or a burst pipe?
No. Sudden water discharge from plumbing, appliances or a water heater is not a FAIR Plan peril. A DIC policy is the usual way to cover it.
Does the FAIR Plan cover theft?
No. Theft of personal property is not covered by the FAIR Plan and is typically picked up by a DIC policy.
What is the FAIR Plan’s maximum dwelling limit?
Up to $3 million for a residential property. Homes that would cost more than that to rebuild need excess coverage above the plan.
Is a FAIR Plan policy enough for my mortgage?
Lenders commonly accept it as hazard coverage when the dwelling limit meets their requirement, but satisfying the lender is not the same as being properly insured. The lender does not care that you have no liability or theft coverage.
Can I get a regular policy again later?
Often, yes. The FAIR Plan is best treated as a bridge. Documented mitigation and changing carrier appetite mean a home that is unplaceable this year may be placeable at a future renewal, which is why the home should be re-marketed each term.
Sources
- California Department of Insurance: Residential Insurance Guide
- California FAIR Plan: Difference in Conditions
General information about the California FAIR Plan as of September 2026, not legal advice. FAIR Plan forms, limits and optional coverages change; confirm current terms before relying on them. Coverage depends on underwriting and the terms, conditions and exclusions of the policy actually issued.