Producer Manual

The California FAIR Plan Association (the FAIR Plan) is an association of all insurance companies authorized to transact basic property insurance in California. Established under State law, the FAIR Plan provides insurance coverage to responsible applicants who have been unable to secure insurance for their home or business in the normal market.

Producers are not agents or representatives of the FAIR Plan in any respect and may not bind coverage on behalf of the FAIR Plan. They are not authorized to transact insurance coverage, or receive information from others on behalf of the FAIR Plan. Endorsements to FAIR Plan policies must be signed by an employee of the FAIR Plan authorized to do so, and no endorsement may be validly issued or signed by any other person on behalf of the FAIR Plan.

In transacting insurance with, but not on behalf of the FAIR Plan, all licensed insurance agents and brokers act as insurance brokers for applicants and policyholders, not as agents of the FAIR Plan.

GENERAL INFORMATION

Coverages Available

Please refer to the Coverages link for descriptions of and links to the policy contracts and endorsements.

Eligible Areas

Please refer to the Eligible Areas link for information on those areas eligible for FAIR Plan coverage.

Maximum Limit of Coverage

Please refer to the FAIR Plan Coverage Limits link for information on the maximum limits available for each line of business (Dwelling, Commercial, and Businessowners).

No Broker Fee Notice

Producers should be aware that the California Department of Insurance adopted regulations governing the charging of Broker fees (Title 10 - California Code of Regulations, section 2189 . 1 et seq.) Section 2189.3 (b) of the regulations prohibits producers from charging any fee, directly or indirectly, for services related to procuring coverage from the FAIR Plan. The Department defines "services" to include any advice or assistance.

Payment of Premium

The FAIR Plan sends all new business quotations on producer generated business to the producer of record. An applicant's copy of the quotation form accompanies all such forms sent to the producer of record. This copy explains how payments may be made and the terms and conditions of the offer. The Plan will accept payment under the terms and conditions of the offer from the producer of record or directly from the applicant or insured. All payments must be accompanied by a copy of the FAIR Plan quotation or billing form.

Endorsements and renewals are billed directly to the insured unless the FAIR Plan has been instructed to bill a different person/organization. All payments must be accompanied by a copy of the FAIR Plan quotation or billing form to insure proper credit of the remittance. It is not necessary to write a separate check for each item, unless payment is being made for a CEA earthquake policy.

Although most producers are very responsible when it comes to remitting premiums to the FAIR Plan on behalf of the producers' clients, some producers have either failed to do so altogether after their clients have paid them, or have remitted with checks drawn on closed accounts or accounts with insufficient funds. Upon the failure of such a producer to provide cashier's checks, money orders, or other payment on good funds when requested to do so by the FAIR Plan, the FAIR Plan reserves the right to discontinue considering future applications for insurance submitted by that producer on behalf of his or her clients. The FAIR Plan may discontinue considering applications from producers for other reasons, as well.

All premiums must be paid in the gross amount.

Automated Payments Online

We now accept electronic checking or savings account payments from producers, policyholders or third parties on new business quotations, mid-term endorsements, and renewal offers for FAIR Plan residential, commercial, and businessowner (BOP) policies via the payment button on the home page of our website. Refer to the Producer Bulletin section on our website for detailed features of this system.

We are utilizing an Automated Clearing House (ACH) as an intermediary before posted payments reach our bank. Although payments will be deemed as received once the transaction is submitted, insurance brokers can not bind coverage or commit the FAIR Plan in any way.

Verifying Payments via Automated Phone System

Producers and insureds can verify if policy payment has been received and posted through our Automated Phone System. This information can be accessed in either English or Spanish 24 hours a day/7 days a week at (213) 487-0111.

Waiver of Premiums Owed

The FAIR Plan will waive additional premiums owed if the amount is $3.00 or less.

Deemer Provision

If through no fault of the applicant, acceptance or rejection of an application is not made by the FAIR Plan within twenty (20) days after the date the completed application is received in the FAIR Plan office, the coverage requested in the application is deemed to be effective on the twenty-first day after such receipt, provided that a provisional deposit premium of twenty-five dollars is received in the FAIR Plan office within forty-five days from the date the application is received in the FAIR Plan office. If the deposit premium is not received in the FAIR Plan office within such forty-five (45) day period, no coverage shall be deemed ever to have become effective and a new application must be submitted. Send no money with the application. The FAIR Plan will notify you by letter and include the date of the application's receipt, if the FAIR Plan is unable to quote by the twentieth (20th) day.

Effective Dates of Coverage

Please refer to the Effective Dates of Coverage link for information on effective dates for new business and endorsements.

Escrow Closing/Refinance for Existing Policies

Whenever a producer or applicant desires proof of insurance for the purpose of closing escrow for refinance transactions, a copy of the escrow instructions should be sent to the FAIR Plan with a request that the FAIR Plan provide proof of insurance. The producer must send the FAIR Plan a copy of the escrow instructions, which must clearly state that escrow is closing , and include the proper vesting information. The producer is not authorized by the FAIR Plan to issue on its behalf any documents, including proof of insurance, showing the existence of a FAIR Plan policy.

The FAIR Plan will issue the new Endorsement Declaration, or provide a letter verifying that the new coverage is in effect. For faster service, producers registered via our online system can request non-money endorsement transactions, such as lender/loss payee changes, online.

In cases where escrow requires evidence of coverage, if the producer/insured's request to increase coverage accompanies the escrow instructions, the endorsement quotation will be prepared, and the endorsement declaration will be issued immediately upon receipt of premium. Producers can determine if premium payment has been received by utilizing our online system, or our automated phone system at any time.

Inspections

Property is inspected at the discretion of the FAIR Plan after the policy is issued to determine the physical condition of the property or to establish the basis for a brush/wildfire charge. These inspections are not for the purpose of determining property valuation or correcting inaccuracies in the information submitted in the application for insurance or renewal of insurance.

In the event the inspection report shows the risk does not meet the FAIR Plan underwriting standards but can be improved to meet such standards, the FAIR Plan will advise the insured and the producer what changes noted in the inspection report must be made to the property for it to remain eligible for insurance. Upon completion of the changes by the insured, the FAIR Plan must receive photos and/or receipts as proof that the changes have been made.

If the inspection report shows that the property is uninsurable according to the FAIR Plan underwriting standards, the policy will be cancelled, non renewed, or rescinded and the insured, producer, and mortgagee will be notified of the reason for the cancellation, non renewal or rescission.

Properties submitted to the FAIR Plan for coverage consideration must be in insurable condition, and meet the FAIR Plan’s underwriting guidelines. If the risk submitted for coverage has any existing property damage, the FAIR Plan will decline to issue a quotation UNLESS a copy of a contract signed by a licensed contractor and the applicant is submitted with the new business application. The contract should indicate in detail the scope of the work to be done, the start date and projected completion date.

If an insured with a brush/wildfire charge on their policy secures additional clearance and desires a brush/wildfire re-inspection, a written request should be submitted directly to the FAIR Plan. A re-inspection will be ordered and the results of that inspection will be communicated directly to the insured with a copy to any producer acting for the insured.

Right of Appeal

Any applicant or insured shall have the right of appeal to the FAIR Plan within 60 days of written notification of an adverse underwriting finding or decision of the FAIR Plan. Each notification of a potentially adverse action shall be accompanied by a statement that the applicant has the right to appeal and will also set forth the procedures to be followed for such appeal.

Cancellations

All premium refunds due on account of policy cancellations are computed on a pro rata basis.

The FAIR Plan will cancel a policy effective the date the FAIR Plan receives the request for cancellation in writing from the insured or producer unless the date of cancellation requested is a later date.

If a written request for flat cancellation of a new business policy is received in the FAIR Plan office within 30 days of the inception date, the policy will be cancelled flat.

If the property was sold, the FAIR Plan should be notified of the desired cancellation date. If the date of cancellation is more than 30 days prior to the date the request is received, a copy of the escrow Closing Statement will be required by the FAIR Plan.

If coverage has been replaced by another insurance company (or companies) the FAIR Plan policy will be cancelled effective the inception date of the replacement policy. If the request for cancellation is received more than 90 days from the date coverage is replaced, cancellation will be effective the date the request is received but credit will be allowed for duplicate insurance if a copy of the replacement policy is submitted (per California Insurance Code Sections 485-486).

Installment Plan/Financing Premiums

The FAIR Plan has an optional installment plan applicable for either residential or commercial properties. If the annual premium is $250.00 or more, premiums may be paid in three installments consisting of a 40% down payment, and two separate installments of 30% each, with the second installment due three months from the inception date of the policy. The final installment is due six months from the inception date of the policy.

There is a $2.50 service charge applicable for each installment billing, for a $7.50 total transaction fee.

The FAIR Plan will generate and mail a billing notice 45 days before the due date of the second installment, and the final installment.

When a request to add or increase coverage is received, an endorsement Quotation is issued showing the additional premium resulting from this change. This additional premium must be paid in full (outside the installment billing) in order to endorse the requested coverage change to the policy.

If an additional premium endorsement is generated by the FAIR Plan (e.g. occupancy, construction type, protection class), additional premiums due will be spread over any remaining installment payments.

California FAIR Plan will accept a commercial premium financing agency gross payment for the full amount of our billing.

Claims

It is the insured’s duty under the policy to report any loss or damage to covered property directly to the FAIR Plan. Insurance agents and brokers are not agents or representatives of the FAIR Plan in any respect, and a report to them of loss or damage does not satisfy the insured’s duty to notify the FAIR Plan.

Losses may be reported 24 hours a day, seven days a week, online via the home page of the FAIR Plan’s website at www.cfpnet.com. Losses may also be reported via phone at (213) 487-0111.

The Claims Department will make every effort to acknowledge receipt of the notice of loss to the insured and producer within 24 hours, and the acknowledgement will include both the claim number and name and contact information of the adjusting company.

Producers and their staff should be familiar with the Claims Practices Regulations relative to submitting claims on behalf of their client(s) in a timely manner. Copies of the regulations can be obtained from the Department of Insurance.

Commission Rate

New business commissions for all policies with an effective date of 4-1-2010 or later will be 10%.

Renewal commissions for all policies with an effective date of 4-1-2010 or later will be 8%.

Commissions paid on mid-term change transactions will be based on the commission in place for the current term of the policy.

These changes apply to all lines of business and property locations.

The FAIR Plan is the market of last resort and should only be considered if no alternatives are available in the voluntary market.

Commission Statements

Commissions are paid monthly by the tenth (10th) day of every month. All premiums must be paid in the gross amount. Producers may not deduct commissions from any premiums due when making payment.

Change of Producer and Producer Mergers

To be recognized by the FAIR Plan as effective, letters of record changing producers must be signed by the insured, or the producer releasing the account, and the producer acquiring the account. Broker of record changes will not be accepted for new business quotations.