The Connecticut FAIR Plan Explained: Who Needs It, What It Covers, and Its Limits

Short answer: The Connecticut FAIR Plan is an insurer-of-last-resort program for property owners who cannot find coverage in the standard market. It is basic, named-peril, actual-cash-value coverage with a dwelling limit of $350,000 and personal property up to $75,000, optional liability up to $300,000, and no coverage for theft or freezing. Homes within 2,600 feet of the shore carry a 5% hurricane deductible. For most owners, and especially high-value or coastal homes, it is a stopgap to combine with other coverage or replace as soon as possible.

Who uses the FAIR Plan

Applicants generally must have been declined by the standard market. Typical cases include homes with severe condition issues, recent large losses, unusual construction, or a sudden non-renewal close to a closing date. Eligible property includes one-to-four family owner- or tenant-occupied dwellings, condominiums and row houses; farm property and many vacant properties are not eligible. Applications go through a licensed Connecticut producer, and no producer can bind FAIR Plan coverage; the plan decides after review and inspection.

What it covers and does not

• Covered: named perils such as fire, lightning, windstorm and hail, explosion and certain others, at actual cash value.
• Not covered: theft, freezing and water damage, and anything outside the named perils; no replacement-cost option and no open-peril form.
• Limits: dwelling up to $350,000, contents up to $75,000, and liability options of $25,000 to $300,000 (each with $1,000 of medical payments), available on one-to-three family occupied dwellings.
• Deductibles: options from $250 to $10,000 for homes, plus a separate hurricane deductible of 5% of the dwelling limit within 2,600 feet of the shoreline.

Why it is a poor fit for high-value homes

A Connecticut home that would cost $1.5 million to rebuild cannot be adequately insured with a $350,000 dwelling limit on an actual-cash-value basis. Alternatives usually include:

• Excess and surplus lines property carriers that write difficult or high-value risks
• Fixing the underwriting issue, such as a roof, oil tank, electrical system or tree overhang, then re-marketing to admitted carriers; see aerial-photo non-renewals and oil tanks
• A FAIR Plan policy combined with a difference-in-conditions policy that fills theft, water and liability gaps, where available

If you are being pushed toward the FAIR Plan

• Get the reason for the non-renewal or declination in writing; see what to do inside your 60 days.
• Have an independent agent with surplus lines access re-market the home before accepting the FAIR Plan.
• If you do use it, add separate liability and flood coverage, and set a date to re-market.

New England Insurance, an independent Connecticut agency in Bridgeport since 2012, places hard-to-insure homes in admitted, surplus lines and FAIR Plan markets and helps owners get back to standard coverage. Request a review.