State insurers of last resort: FAIR plans |Insurance.com

What is an insurer of last resort?

An insurer of last resort is a state-mandated property insurance plan that provides coverage to individuals who are unable to obtain insurance in the regular private marketplace.

Often referred to as FAIR plans, these policy offerings are typically used as a last resort and provide basic coverage for properties that are considered high-risk or difficult to insure. This may be because they are located in hurricane-prone areas or at risk for some other type of natural disaster, like wildfires.

Although the plans are implemented at the state level, private insurers operating in the state finance them through a pool of funds. Private insurance companies still write and administer the plans, although Florida and Louisiana have state-run companies that write the last-resort plans.

FAIR plans were initially implemented in 26 states, as well as the District of Columbia and Puerto Rico. Today, FAIR plans have expanded to include 33 states, D.C., and Puerto Rico.

There is an equivalent to FAIR plans called Beach and Windstorm plans, which provide insurance coverage in designated areas against hurricanes and other severe windstorms.

Colorado is the latest state to create a program for homeowners who can’t find insurance elsewhere, launching its program in April 2025.

Who needs last-resort homeowners insurance?

Homes in high-risk areas are more likely to require a FAIR plan policy. Natural disasters such as hurricanes and wildfires have made it difficult or extremely expensive to insure property. Other reasons include property age and condition.

In some states, such as Florida, Louisiana and Texas, private insurance companies have chosen to limit their business or entirely pull out of high-risk areas. It’s not entirely connected to natural disasters, however. In Florida, for example, some insurers have decided to exit the state due to soaring litigation costs.

Some property owners may be forced to turn to a FAIR plan when they can’t get private insurance for other reasons, such as the age of the property, old plumbing, wiring or heating systems or because they live in an area associated with high crime, vandalism and theft.

Each state plan is managed differently and may have varying requirements to qualify. Generally, property owners must demonstrate they were unable to obtain insurance through a private insurance company at a rate that wasn’t unfairly prohibitive. In addition, you may be required to:

Make necessary improvements to limit the risk of fire, theft, or water damage, such as upgrading your electrical wiring, heating, or plumbing.
If you do not undertake steps to correct conditions that put your property at high risk, the FAIR plan administrators have the right to deny coverage.

Additional requirements may include ensuring the property doesn’t have any outstanding taxes, penalties or liens, that it isn’t in violation of any local ordinances or rules, and that the owner attempts to get private insurance after a certain period, such as two years.

Which states have last-resort insurance plans?

Currently, 33 states, plus the District of Columbia, offer FAIR plans or their equivalents. They are: Alabama, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, New Jersey, New Mexico, New York, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Texas, Virginia, Washington, West Virginia and Wisconsin.

Windstorm plans exist in Florida, Mississippi, South Carolina and Texas. Other variations are in place in other coastal states. In New York, for example, the Coastal Market Assistance Plan helps owners get coverage if their application has been rejected by at least three private insurers.

Florida and Louisiana both have state-run insurers of last resort, Citizens Property Insurance in Florida and Louisiana Citizens Property Insurance, respectively. These provide coverage for homes that can’t be insured any other way. It’s a state-run insurance company that handles policies other companies won’t write. In most other states, private companies still administer the policies through the FAIR plan.

How does Colorado’s new FAIR plan work?

Under Colorado's FAIR plan, private insurers offer bare-bones coverage and don't serve as a competitive alternative to private options. Property owners must show they couldn't obtain insurance from a private company by providing proof of rejection from three traditional insurers. Your property must also meet the plan's "minimum condition standards." You can buy a policy only through a licensed agent.

A base FAIR plan policy only covers fire damage. Coverage is capped at $750,000 for residential property owners and $5 million for commercial property. There is optional coverage for damage from wind, hail, explosions, vandalism, and malicious mischief.

The Colorado FAIR plan policies can only be renewed for up to three years.

Representatives from the state’s private insurance industry were consulted on the FAIR plan framework, but they still have concerns.

Carole Walker, executive director of the Rocky Mountain Insurance Information Association, says they have concerns and will watch its implementation carefully.

“There is a lot of trepidation from insurers in Colorado about creating one of these,” she says. “We worked very closely with the bill’s sponsors to make sure it truly is an insurer of last resort. We’ve seen examples in other states where they’ve created these entities and they end up driving a lot of private insurers out.”

The ultimate goal, she adds, is to provide a temporary backstop during this period of higher wildfire and hail risk and eventually get people back into the private market.

The measures the association worked to include, and which have been incorporated into the plan, include the policy financial caps, the requirement that property owners provide proof that they tried to obtain private insurance and could not, and that representatives from the insurance industry have a majority of seats on the new entity’s board.

“It has to be run like an insurance business and can’t be beholden to whatever politics might be in place or whatever governor might be in place a few years from now,” she says.

Is property insurance coverage through a state or FAIR plan the same as private insurance?

No. Each state has variations or limitations on the amount of coverage offered. In Colorado, for example, the new FAIR plan caps coverage at $750,000 for residential property and $5 million for commercial. FAIR plans also limit the perils the plan will cover; many cover only fire or wind.

Some of the typical policies under a FAIR plan provide coverage for:

Costs to repair or rebuild a structure if damaged or destroyed by an event covered by the plan. Some FAIR plans are limited to damage only from fire, vandalism, riots and windstorms, whereas standard policies typically cover more.
Coverage to pay for damaged or destroyed personal belongings.
Liability coverage to pay for medical expenses or property damage to others where you are legally liable.

Plans also vary by state, so make sure you fully understand the scope of your coverage.

Is a last resort insurer more expensive than private alternatives?

FAIR plan insurance is generally more expensive than private coverage. Last resort insurers are for those property owners who have been unable to get insurance through a private insurer. They’re not meant to provide a cheaper alternative. This encourages people to get off the plan and find a private policy as quickly as possible.

In Louisiana, for example, the state FAIR plan operated under Louisiana Citizens is specifically mandated to be more expensive than private insurers.

Because of its limitations and the high cost, it almost always makes sense to secure property insurance through the standard homeowners insurance market.

If you are having difficulty getting coverage, consider the following strategies before throwing in the towel:

If your property is considered high-risk because of its condition, such as old plumbing or wiring, find out what steps you can take to make it more insurable. It might result in some up-front costs, but the longer-term costs could be greater.
Shop around more. Consider working with an insurance agent who may be more aware of which companies are willing to offer insurance in certain high-risk areas or perhaps which new companies have begun offering insurance in the state.
Talk to the company that currently offers you other forms of insurance like car insurance. They may be willing to cut you a break to maintain your loyalty.
Talk to your neighbors about which company insures their homes. Odds are they may be willing to take on yours as well.
Call your state insurance department. It can generally provide you with a list of insurers offering policies in your area.

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