What You Should Know
- The Texas FAIR Plan Association offers coverage to residential properties that have been denied by other insurers
- A home must be denied by at least two private insurance companies before it is eligible for coverage under the Texas FAIR Plan
- Rates for Texas FAIR Plan insurance coverage will vary because each home insurance policy is underwritten individually
The Texas FAIR Plan Association offers home insurance coverage to Texas residents who are unable to purchase home insurance with private insurance companies.
Typically, residents of Texas who live in high-risk areas may find it difficult to find homeowners insurance policies as most insurance companies are unwilling to cover areas that are more prone to damage.
The Texas FAIR Plan exists so that Texas homeowners don't have to forego proper coverage.
What does the Texas FAIR Plan Association do?
Because private insurance companies don't want to cover high-risk areas in Texas, the Texas legislature created the Texas FAIR Plan Association to generate a homeowners insurance market. The home insurance options with the Texas FAIR Plan are often considered a last resort for homeowners.
Coverage with the Texas FAIR Plan includes basic property insurance that covers dwellings and other items on the property. Because the Texas FAIR Plan does not offer much relative to comprehensive home insurance, people attempt to find insurance elsewhere if at all possible.
A Texas FAIR Plan will cover your home and property if there is damage caused by fire, wind, vandalism, and even riots. But there are limits as to how much of your property will be covered by this basic home policy.
Some areas in Texas will only be covered for up to $250,000 in damage. When you compare that to the California FAIR Plan, which pays up to $3,000,000, the Texas FAIR plan seems quite limited.
What is included in a Texas FAIR Plan insurance policy?
Texas FAIR Plan home insurance does not attempt to compete with any of the insurance companies involved in the private market. Similarly, anyone applying for Texas FAIR Plan homeowners insurance must first be turned down by at least two private insurance companies.
Because the Texas FAIR Plan Association exists to help people who otherwise cannot find coverage, it is important to ensure that you are not eligible for home insurance coverage with another company before purchasing a Texas FAIR Plan policy.
Because the Texas FAIR Plan exists as a last resort insurance policy, many people are unaware that their property is subject to specific underwriting guidelines similar to those used by insurance companies in the private market.
Can you be denied coverage under the Texas FAIR Plan?
It is possible to be denied coverage under the Texas FAIR Plan. If a private homeowners insurance company is willing to cover you, you will be required to purchase coverage with that company.
Additionally, if there is a property that has been deeded to a business or is vacant or unoccupied — regardless of ownership — that property may not be eligible for Texas FAIR Plan coverage.
In some cases, you may be denied coverage under the Texas FAIR Plan unless you update your home to reduce the possibility of fire or water damage. It is not uncommon to have to update the wiring in your home, install new plumbing, and repair the existing roof.
Reports list Texas as one of the top 10 states that are most at risk when it comes to disasters and an increased number of home insurance claims. The typical weather in Texas — including thunderstorms, tornadoes, hurricanes, and wildfires — makes certain areas in the state susceptible to major home and property damage.
Are there benefits to purchasing a Texas FAIR Plan policy?
The major benefit of a Texas FAIR Plan is that you will receive coverage. In some cases, there is no alternative way for Texas homeowners to receive a proper home insurance policy. But you may find that the policy offered to you under the Texas FAIR Plan is lacking.
There are alternatives to the Texas FAIR Plan that you may want to consider. First, you can speak to insurance agents affiliated with both large and small companies to determine why you were denied coverage. If you could request a lower coverage limit or make some other alterations to your policy, you may be able to purchase coverage with a private insurance company.
If you have neighbors who live nearby, ask them what they do for their home insurance policy. There's a chance that your neighbors know of insurance companies and options that you're unaware of, so it's a good idea to check with them to find out.
Lastly, you can make specific changes to your home to ensure that it is less susceptible to water damage, burglary, fire damage, and more.
These changes could become fairly expensive, so you'll want to contact private insurance companies to determine if making these changes will allow you to purchase a home insurance policy. If not, it may not be worth the investment.
As stated previously, most Texas FAIR Plan insurance reviews mention that the coverage should be viewed as a last resort. This means that, if at all possible, you should attempt to find an alternative form of home insurance coverage.
How much is a Texas FAIR Plan policy?
Because Texas FAIR plan policies are underwritten like any other home insurance policy, you will need to apply for a quote to know exactly how much you will pay for coverage. To get a quote, visit the Texas Fair Plan Association website and contact one of the agents listed through the "Find an Agent" section.
Having a home in a high-risk Texas location will likely cause you to pay above-average premiums for your home insurance. However, that may not be the case based on other factors.
If you have questions or concerns about the Texas FAIR Plan Association, you can always call the Texas FAIR Plan insurance phone number and speak with a representative who will be able to provide you with more specific information based on your situation.