Connecticut FAIR Plan

The Connecticut Property Insurance Placement Facility, commonly known as the Connecticut FAIR Plan, provides essential property insurance for applicants who cannot secure coverage through the normal insurance market.

Purpose and Function

Role as Residual Market

The Connecticut FAIR Plan serves as a last resort insurance option:

Who Qualifies:

• Applicants denied coverage by at least one admitted insurer
• Properties with unique risk factors (coastal location, age, condition)
• High-risk areas where insurers limit exposure
• Properties requiring basic fire coverage

FAIR Plan Principles:

• Insurance of last resort
• Basic named peril coverage only
• Actual cash value (not replacement cost)
• Higher premiums than standard market
• Limited coverage compared to standard policies

Exam Tip: The Connecticut FAIR Plan is NOT a first choice. Applicants must be denied by at least one standard market insurer before applying to the FAIR Plan.

Coverage Provided

Coverage Limitations

Key Exclusions:

• Theft (not covered)
• Freezing pipes (not covered)
• Water damage (not covered)
• Additional living expenses (limited)
• Personal liability (not included)

Actual Cash Value vs. Replacement Cost

FAIR Plan uses Actual Cash Value (ACV):

ACV Calculation Example:

• Replacement cost to repair damage: $50,000
• Age of damaged component: 10 years
• Expected useful life: 20 years
• Depreciation: 50% (10/20 years)
• ACV payment: $25,000 ($50,000 - 50% depreciation)

Limitation:

• Insured receives depreciated value, not full replacement cost
• May be insufficient to fully repair or replace property
• Significant out-of-pocket expense likely

Exam Tip: Connecticut FAIR Plan provides actual cash value coverage, which pays replacement cost MINUS depreciation. This is less favorable than replacement cost coverage available in the standard market.

Hurricane Deductibles

Coastal Property Requirements

Properties within 2,600 feet of Connecticut shorelines enrolled in the FAIR Plan face:

Deductible Structure:

Hurricane Deductible Trigger:

• National Weather Service declares hurricane winds of 74+ mph anywhere in Connecticut
• Deductible applies until 24 hours after last hurricane warning for any part of Connecticut
• Applies to wind damage during hurricane event

Example:

• FAIR Plan dwelling coverage: $300,000
• Standard deductible: $2,500
• Hurricane deductible: $15,000 (5% of $300,000)
• Wind damage during declared hurricane: Pay $15,000 deductible
• Fire damage any other time: Pay $2,500 deductible

Exam Tip: The 5% hurricane deductible applies to FAIR Plan policies just as it does to standard homeowners policies for coastal properties. This is a significant out-of-pocket expense.

Coastal Market Assistance Program (C-MAP)

Purpose of C-MAP

The Coastal Market Assistance Program (C-MAP) was created to assist homeowners in Connecticut coastal areas:

C-MAP Function:

• Helps coastal property owners who cannot obtain standard market insurance
• Works with Connecticut FAIR Plan to provide coverage
• Authorized by Connecticut Insurance Department
• Administered through Connecticut FAIR Plan
• Focuses on properties near Long Island Sound

Eligibility:

• Properties in designated coastal areas
• Unable to obtain coverage in standard market
• Meet Connecticut FAIR Plan underwriting guidelines
• Property must be insurable under basic standards

C-MAP Coverage Features

Coverage Characteristics:

• Similar to standard Connecticut FAIR Plan
• Named peril coverage
• Actual cash value basis
• Hurricane deductibles apply (5% for coastal properties)
• Limited compared to standard homeowners policies

Application Process:

1. Denied by Standard Market: Must show evidence of denial
2. Apply to C-MAP: Through Connecticut FAIR Plan
3. Property Inspection: May require inspection
4. Underwriting Review: Assessment of property condition and risk
5. Coverage Issued: If property meets basic insurability standards

Application and Underwriting

FAIR Plan Application Process

Step-by-Step Process:

1. Obtain Standard Market Denial: Must be denied by at least one admitted insurer
2. Complete FAIR Plan Application: Available at ctfairplan.com
3. Submit Documentation:
   • Proof of standard market denial
   • Property information and photos
   • Dwelling valuation or appraisal
   • Current mortgage information (if applicable)
4. Property Inspection: FAIR Plan may inspect property
5. Underwriting Decision: Approval, denial, or conditional approval
6. Policy Issuance: Coverage begins on effective date

Underwriting Criteria:

• Property must meet minimum insurability standards
• No excessive deferred maintenance
• Roof in reasonable condition
• Electrical, plumbing, heating systems functional
• No major structural issues
• Property accessible to fire department

Property Improvement Requirements

Conditional Approval:

If property has deficiencies, FAIR Plan may require improvements:

Common Requirements:

• Roof repairs or replacement
• Electrical system upgrades
• Heating system repairs
• Removal of fire hazards
• Structural repairs
• Address code violations

Timeline:

• Insured given reasonable time to complete improvements (typically 30-90 days)
• May issue policy conditionally during improvement period
• Final inspection required to confirm compliance
• Failure to complete may result in cancellation

Premiums and Costs

FAIR Plan Pricing

Premium Factors:

Typical Premium Comparison:

• FAIR Plan premiums typically 20%-50% higher than standard market
• Coastal properties pay additional surcharge
• Actual cash value (vs. replacement cost) does NOT significantly reduce premium
• Limited coverage options mean fewer discounts available

Payment Options

• Annual Payment: Full premium due at policy inception
• Semi-Annual: Two payments per year
• Quarterly: Four payments per year (if available)
• Monthly: May be available through premium finance companies

Seeking Standard Market Coverage

Transitioning from FAIR Plan

Getting Back to Standard Market:

The FAIR Plan encourages insureds to regularly seek standard market coverage:

Steps to Transition:

1. Maintain Property: Keep property in good condition
2. Complete Improvements: Address any deferred maintenance
3. Shop Annually: Apply with standard market insurers each year
4. Work with Agent: Independent agents can access multiple markets
5. Consider Surplus Lines: May offer bridge between FAIR Plan and standard market

Benefits of Standard Market:

• Replacement cost coverage available
• Broader coverage (open peril options)
• Personal liability coverage included
• Additional living expense coverage
• Potentially lower premiums
• More coverage options and endorsements

Exam Tip: Connecticut encourages FAIR Plan insureds to seek standard market coverage annually. The FAIR Plan is intended as temporary solution, not permanent coverage.

Connecticut FAIR Plan Contact Information

Resources:

• Website: ctfairplan.com
• Application: Available online or through licensed agents
• Producer Information: Agents must be appointed with FAIR Plan
• Consumer Assistance: Connecticut Insurance Department (800) 203-3447

For Producers:

• Must be licensed Connecticut P&C producer
• Appointment with Connecticut FAIR Plan required
• Commission schedule available on website
• Continuing education on FAIR Plan available