If your California home is insured through the FAIR Plan, you can still sell it. Thousands of homes in wildfire country change hands with FAIR Plan coverage in place. What makes these sales different isn’t your policy so much as your buyer’s: their lender needs proof of insurance before it will fund the loan, and in some ZIP codes that insurance is hard to get. This guide covers why homes end up on the FAIR Plan, how it affects buyers and their lenders, what it does to your buyer pool and price, and how to keep the timeline from slipping.

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What the FAIR Plan Is

The California FAIR Plan is the state’s insurer of last resort. It was created by the Legislature in 1968 and is funded by the admitted insurance companies that sell property coverage in California. It isn’t a government agency and it isn’t a regular insurance company. Its job is to offer basic coverage to owners who can’t get a policy in the regular market.

The standard FAIR Plan dwelling policy is a fire policy. It covers fire, lightning, internal explosion and smoke, with a few optional add-ons. It does not include the things most people expect from homeowners insurance, such as liability coverage, theft, or water damage from a burst pipe. To fill those gaps, most owners pair it with a separate Difference in Conditions (DIC) policy from a private carrier.

According to the California Department of Insurance, the FAIR Plan’s limits have been raised to $3 million for residential properties and $20 million per location for commercial policies. The Department has also been pushing the FAIR Plan toward a more complete residential policy, but as of now most owners still rely on the FAIR Plan plus DIC combination.

Why So Many Homes Are on It Now

Over the past several years, major insurers pulled back from writing new homeowners policies in California and non-renewed many existing ones, especially in high wildfire-risk areas. Owners who couldn’t find a replacement policy moved to the FAIR Plan. That shift accelerated after large fires, including the January 2025 fires in Los Angeles County.

Those fires also strained the FAIR Plan itself. In February 2025, state regulators approved a $1 billion assessment on member insurers to keep the FAIR Plan paying claims, and part of that cost can be passed on to policyholders statewide. The state’s response, called the Sustainable Insurance Strategy, is meant to bring private insurers back into higher-risk areas in exchange for rate-setting changes. It’s too early to say how quickly that will change the market in any given neighborhood, so plan your sale around the coverage that exists today.

How It Affects Your Buyer

Your FAIR Plan policy doesn’t transfer to the buyer. The buyer has to get their own coverage, and that’s where most of the friction comes from.

Cash buyers aren’t required by anyone to carry insurance at closing. They’ll want coverage for their own protection, but a delay in finding it won’t stop the sale.
Financed buyers must show their lender proof of hazard insurance before the loan funds. Fannie Mae, for example, accepts a FAIR Plan policy when it’s the only coverage available, but lenders still have their own coverage requirements, so many buyers end up adding a DIC policy.
Condo buyers may also run into issues if the HOA’s master policy has lapsed or moved to the FAIR Plan, which can affect loan approval for the whole building.

The practical problem is timing and cost. A buyer who starts shopping for insurance after they’re already in escrow may find that quotes take time, cost more than expected, or come with exclusions. If the combined cost of a FAIR Plan policy and DIC policy is much higher than the buyer budgeted, it can change what they can afford and put the deal at risk.

It also helps to know what a DIC policy usually adds: liability, theft, water damage, loss of use and other perils the FAIR Plan leaves out. There’s no single standard DIC form, so coverage and exclusions vary by carrier. A buyer’s agent or insurance broker should compare the actual policy wording with the lender’s requirements rather than assuming any DIC quote will satisfy them.

What It Does to Price and Buyer Pool

High insurance costs work like a higher monthly payment. A buyer who has to spend more on coverage has less room for the mortgage, so some buyers drop out or offer less. In areas where most homes are on the FAIR Plan, that’s already priced into recent sales. In areas where only some homes are, a house that can only get FAIR Plan coverage may draw fewer offers than a similar house down the street.

There isn’t a reliable published number for how much FAIR Plan status lowers a home’s value, and it varies a lot by neighborhood. Your agent’s comparable sales, along with what local buyers are actually paying for coverage, will tell you more than any statewide average.

How to Keep the Sale on Track

Gather your current policy declarations, any DIC policy, and any non-renewal letters before you list.
Write down home-hardening work you’ve done, such as a Class A roof, ember-resistant vents, defensible space clearing, or a fire-resistant siding upgrade. These can help a buyer get better quotes, and the FAIR Plan offers wildfire mitigation discounts.
Share a broker’s contact who writes FAIR Plan and DIC policies in your area, so buyers can get quotes early.
Ask buyers to start insurance shopping during the offer stage, not after escrow opens.
Build a little extra time into the closing date if your buyer is financing.
Keep your own coverage in force until the day escrow closes. Don’t cancel early because a buyer is lined up.

If You Get a Non-Renewal Notice Mid-Sale

If your carrier non-renews you while the house is on the market or in escrow, don’t let coverage lapse. Contact a broker right away about a FAIR Plan policy and, if needed, a DIC policy. An uninsured house is a risk to you, and if you still have a mortgage, your lender can force-place coverage that is usually expensive and protects the lender, not you.

When a Cash Sale Makes Sense, and When It Doesn’t

A cash sale can make sense if the house has fire damage, needs major work, sits in an area where buyers are struggling to get financed, or you’re under a deadline. If you’re in that spot, our guide to selling a fire-damaged house in California may help, as may our article on relocating from Altadena after the Eaton Fire.

But if your house is in good shape, you have time, and financed buyers in your area are still closing, listing will often net you more. Being on the FAIR Plan alone isn’t a reason to sell for less. It just means you need to plan for the insurance step earlier.

Common Questions

Can my buyer take over my FAIR Plan policy?

No. Insurance policies don’t transfer with the house. The buyer applies for their own coverage, which may also be through the FAIR Plan.

Do I have to tell buyers my home is on the FAIR Plan?

Your insurance arrangement itself isn’t the main disclosure item, but California sellers must disclose known material facts, and the Natural Hazard Disclosure Statement covers whether the home is in a very high fire hazard severity zone. Talk to your agent or a real estate attorney about what applies to your property.

Will a cash buyer care about the FAIR Plan?

A cash buyer will still want to insure the house, but there’s no lender deadline involved, so it rarely affects the closing timeline.

Get a Cash Offer

If you’d like to compare a cash sale with listing, Cash Home Buyers CA can help. We either buy directly or bring a vetted cash buyer, and we can close on your timeline without waiting on a lender’s insurance requirements. Call us at (424) 435-2326 or request a no-obligation offer online.

Selling a House on the California FAIR Plan: What Changes at Escrow