Summary: Fair Access to Insurance Requirements (FAIR) plans are a market of last resort that may provide insurance to those who cannot obtain coverage in the voluntary market. They are state-run and provide insurance to high-risk properties. Eligibility varies by state, but it is typically required for the property to be rejected by two or three insurers in the voluntary market to be eligible.
Not all states have a FAIR plan, but a majority do. Colorado is the most recent state to establish a FAIR plan, with the signing of HB23-1288 on May 12, 2023. A plan of operation was submitted to the Colorado Division of Insurance and approved on July 26, 2024. They began accepting residential property applications on April 10, 2025.
To be eligible for the Colorado FAIR plan, a property must have been denied coverage by at least three standard insurers in the state. Since these properties are high-risk, FAIR plan premiums are typically much higher than those found in the voluntary market, and the scope of coverage is limited.
The Colorado FAIR plan offers coverage for losses arising from fire or lightning for residential properties on an actual cash value basis. Homeowners can opt for additional coverage for personal property/contents coverage. They can also opt for additional causes of loss for losses arising from the perils of windstorms or hail, explosions, riot or civil commotion, vehicles, smoke, volcanic eruption, vandalism, and malicious mischief. The maximum combined limit for property and contents is $750,000.
There is no replacement cost option; coverage is limited to actual cash value. Contrary to a standard homeowners policy, there is also no liability coverage and no additional living expenses coverage. Commercial property coverage is also available with a maximum limit of $5 million.
This discussion is an analysis of the form used by the FAIR plan to write residential property coverage. Coverage is written on a modified ISO Dwelling Property Basic Form: CFP DP 00 01 01 25. This discussion is split into several sections. The sections are as follows:
Part 4 - Conditions
E. Other Coverages
1. Other Structures
You may use up to 10% of the Coverage A limit of liability for loss by a Peril Insured
Against to other structures described in Coverage B.
Payment under this coverage reduces the Coverage A limit of liability by the amount
paid for the same loss.
2. Debris Removal
We will pay your reasonable expense for the removal of:
a. Debris of covered property if a Peril Insured Against causes the loss; or
b. Ash, dust or particles from a volcanic eruption that has caused direct loss to a
building or property contained in a building.
This expense is included in the limit of liability that applies to the damaged property.
3. Improvements, Alterations And Additions
If you are a tenant of the Described Location, you may use up to 10% of the Coverage C limit of liability for loss by a Peril Insured Against to improvements, alterations and additions, made or acquired at your expense, to that part of the Described Location used only by you.
Payment under this coverage reduces the Coverage C limit of liability by the amount
paid for the same loss.
4. World-wide Coverage
You may use up to 10% of the Coverage C limit of liability for loss by a Peril Insured Against to property covered under Coverage C while anywhere in the world. This coverage does not apply to property of guests or servants or to rowboats or canoes. Payment under this coverage reduces the Coverage C limit of liability by the amount paid for the same loss.
Analysis
This section provides additional coverages and also places limitations on some of the previously discussed coverages to better explain the scope of coverage. Many of these coverages are found in the ISO homeowners forms, though the specifics may vary.
The first other coverage is for the previously discussed Coverage B–Other Structures and clarifies that the coverage has a limit of up to 10 percent of the Coverage A limit. In addition, payments under Coverage B reduce the Coverage A limit available for the same loss. In the ISO HO 00 03 form, Coverage B also has a limit of up to 10 percent of the Coverage A limit, but it is additional insurance and its use does not reduce the Coverage A limit.
The next additional coverage is debris removal, which pays the reasonable expense for the removal of debris of covered property for a covered loss, and removal of ash, dust, or particles from a volcanic eruption that caused loss to the building or property in the building. This coverage is similar to that found in the ISO HO 00 03 form. Under both policies, debris removal is included in the limit of liability that applies to the damaged property, whether that be Coverage A, B, or C. However, under the ISO forms, if the limit is exhausted, an additional 5 percent of the limit is provided. The homeowners forms also provide up to $3,000 for the removal of fallen trees under certain conditions, a coverage not found in the CFP.
The CFP provides coverage for a loss to improvements, alterations, and additions made by an insured who is a tenant at the insured premises. Up to 10 percent of the Coverage C limit is available. The improvements, alterations, or additions must have been made or acquired at the named insured's expense to the portion of the premises occupied by the named insured who is a tenant. This coverage is included within the Coverage C limit. This is no similar insurance in the HO 00 03 form since it is not designed for tenants, but it can be found in the HO 00 04, and as additional insurance.
We saw earlier under Coverage C that personal property is covered that is usual to the dwelling, and while on the described premises, in contrast to the HO 00 03 form, which provides coverage for personal property owned or used by an insured while it is anywhere in the world. This section does provide some worldwide coverage, awarding up to 10 percent of the Coverage C limit for an insured loss to personal property. Excluded from this coverage are property of guests and servants, and rowboats or canoes. Payment under this section is included within the Coverage C limit.
5. Rental Value
You may use up to 20% of the Coverage A limit of liability for loss of fair rental value as
described in Coverage D.
Payment under this coverage reduces the Coverage A limit of liability by the amount paid for the same loss.
6. Reasonable Repairs
a. In the event that covered property is damaged by a Peril Insured Against, we will pay the reasonable cost incurred by you for necessary measures taken solely to protect against further damage.
b. If the measures taken involve repair to other damaged property, we will pay for those measures only if that property is covered under this Policy and the damage to that property is caused by a Peril Insured Against. This coverage does not:
(1) Increase the limit of liability that applies to the covered property; or
(2) Relieve you of your duties, in case of a loss to covered property, as set forth in Condition D.2.
7. Property Removed
We insure covered property against direct loss from any cause while being removed from a premises endangered by a Peril Insured Against and for no more than five days while removed.
This coverage does not change the limit of liability that applies to the property being removed.
8. Fire Department Service Charge
We will pay up to $500 for your liability assumed by contract or agreement for fire department charges incurred when the fire department is called to save or protect covered property from a Peril Insured Against. We do not cover fire department service charges if the property is located within the limits of the city, municipality or protection district furnishing the fire department response.
This coverage is additional insurance. No deductible applies to this coverage.
Analysis
The policy specifies here that Coverage D–Fair Rental Value has a limit of up to 20 percent of the Coverage A limit. Payments made under Coverage D also reduce the Coverage A limit; it is not additional insurance. The ISO homeowners forms typically provide a Coverage D limit that is 30 percent of the Coverage A limit.
Reasonable repairs coverage pays for the reasonable cost of the insured to take necessary measures to protect property that has been damaged by a covered loss from taking further damage. It also pays for repairs made to other damaged property if that property is covered under the policy and the damage is caused by an insured peril. If the roof of the residence is damaged by a covered peril and the insured purchases a tarp to place over the roof to mitigate further damage, the insurer will reimburse that expense. This coverage is included within the limit of the applicable property, and does not relieve the insured of the “duties after loss” condition of the policy, discussed later. This coverage is identical to that found in the HO 00 03 form.
Property removed coverage covers property that is removed from the insured premises because it is endangered by an insured peril. This is broad coverage as it protects against “direct loss from any cause” while the property is removed from the premises. So if the removed property is damaged by a peril that is typically excluded under the CFP policy, there would be coverage for that loss while the property was removed from the endangered premises. Coverage is available for no more than 5 days, in contrast with the HO 00 03 form, which provides similar coverage for up to 30 days.
Finally, the fire department service charge coverage pays up to $500 for fire department charges incurred by the insured when the fire department is called to protect covered property from an insured peril. There is no coverage available for the response of a fire department that has jurisdiction of the city, municipality, or protection district in which the endangered property is located. This is because there is typically no charge when the property is located within the department’s city, municipality, or protection district. This coverage is additional insurance and there is no applicable deductible. This coverage is identical to that found on the HO 00 03 form.
Not found in the CFP policy that are found in the HO 00 03 policy are the additional coverages of trees, shrubs, and other plants; loss assessment charged by an association of property owners; collapse; glass or safety glazing material; landlord’s furnishings; ordinance or law; and grave markers.
Perils Insured Against
PERILS INSURED AGAINSTWe insure for direct physical loss to the property covered caused by a peril listed below unless the loss is excluded in the General Exclusions.
1A. Fire Or Lightning
1B. Internal Explosion
a. Internal explosion means explosion occurring in the dwelling or other structure covered on the Described Location or in a structure containing personal property covered.
b. Explosion does not mean:
(1) Electric arcing;
(2) Breakage of water pipes; or
(3) Breakage or operation of pressure relief devices.
This peril does not include loss by explosion of steam boilers, or steam pipes, if owned or leased by you or operated under your control.
1C. Smoke
This peril means sudden and accidental damage from smoke, including the emission or puffback of smoke, soot, fumes or vapors from a boiler, furnace or related equipment. This peril does not include loss caused by smoke from fireplaces or from agricultural smudging or industrial operations.
Analysis
The CFP policy provides coverage on a named perils basis for Coverage A, B, and C. This differs from the ISO HO 00 03 policy, which provides special/open perils coverage for Coverage A and B and named perils for Coverage C but it is similar to the Dwelling Fire DP 00 01 policy.
The base policy insures for loss to covered property caused by fire or lightning, internal explosion, and smoke. There is some extended coverage available, discussed in the next section. The CFP policy specifies that there is coverage for loss due to “internal explosion,” while the ISO homeowners forms simply state “explosion.”
An internal explosion is an explosion occurring in the dwelling or other structure on the insured premises, or an explosion occurring in a structure containing covered personal property. This would mean that an explosion that originated from outside the dwelling or other structure would not be covered. Also excluded are the explosion of steam boilers and steam pipes if they are owned or leased by an insured. The policy specifies that electric arcing, breaking of water pipes, and breaking of pressure relief devices are not explosions.
The smoke peril provides coverage for sudden and accidental damage arising from smoke. This does not include smoke originating from fireplaces, farm agricultural smudging, or industrial operations.
When a Premium for Extended Coverage is shown in the Declarations, Perils 2. through 7. Are made part of Perils Insured Against.
2. Windstorm Or Hail
This peril does not include loss:
a. To the inside of a building or the property contained in a building caused by rain, snow, sleet, sand or dust unless the direct force of wind or hail damages the building causing an opening in a roof or wall and the rain, snow, sleet, sand or dust enters through this opening; or
b. To the following property when outside of the building:
(1) Awnings, signs, radio or television antennas or aerials including lead-in wiring, masts or towers; or
(2) Canoes and rowboats.
3. Explosion
This peril does not include loss by explosion of steam boilers or steam pipes, if owned or leased by you or operated under your control. Explosion does not mean:
a. Electric arcing;
b. Breakage of water pipes; or
c. Breakage or operation of pressure relief devices.
This peril replaces Peril 1B.
4. Riot Or Civil Commotion
5. Aircraft
This peril includes self-propelled missiles and spacecraft.
6. Vehicles
This peril does not include loss caused by:
a. A vehicle owned or operated by you or a resident of the Described Location; or
b. Any vehicle to fences, driveways and walks.
7. Volcanic Eruption
This peril does not include loss caused by earthquake, land shock waves or tremors.
Analysis
Insureds have the option to be insured for additional perils for an additional premium. If a premium is shown in the policy’s declarations for extended coverage, then in addition to the perils in the previous section, they are insured for loss caused by windstorm or hail, explosion, riot or civil commotion, aircraft, vehicles, and volcanic eruption.
Like the homeowners forms, the windstorm or hail peril does not include loss to the inside of the building or property inside the building unless a windstorm or hail damaged the building and caused an opening through which rain, snow, sleet, sand, or dust entered. Loss by windstorm or hail to certain property when they are outside of the building is excluded. These include signs, awnings, radio or TV antennas, masts, towers, canoes, and rowboats. The homeowners forms have no such exclusion.
Explosion coverage replaces the base policy peril of “internal explosion.” This expands coverage to include explosions originating from outside the dwelling or other structure, but the exclusions for steam boilers, steam pipes, electric arcing, breakage of water pipes, and breakage of pressure relief devices still apply.
The riot or civil commotion, aircraft, and volcanic eruption perils are identical to the coverage found on the HO 00 03 form. The final peril, vehicles, is more limited as it excludes loss caused by a vehicle owned or operated by an insured or a resident of the insured premises, and any damage caused by a vehicle to fences, driveways, and walkways.
When a Premium for Vandalism Or Malicious Mischief is shown in the Declarations, the following is made part of Perils Insured Against.
8. Vandalism Or Malicious Mischief
This peril does not include loss:
a. To glass or safety glazing material constituting a part of the building other than glass building blocks;
b. By pilferage, theft, burglary or larceny, but we will be liable for damage to the
building covered caused by burglars; or
c. To property on the Described Location, and any ensuing loss caused by any intentional and wrongful act committed in the course of the vandalism or malicious mischief, if the dwelling has been vacant for more than 60 consecutive days immediately before the loss. A dwelling being constructed is not considered vacant.
The most we will pay for this added coverage is $50,000 in any one occurrence. Payments made under this coverage does not increase the limit of liability that applies to the covered property.
Analysis
The final peril the insured can opt for is the peril of vandalism or malicious mischief. As with extended coverage, the insured must pay an additional premium for this coverage, and it must be shown in the declarations.
There are some limitations to this peril that are not found in the homeowners forms. It does not include loss to glass or safety glazing material constituting a part of the building other than glass building blocks, and loss by theft, burglary, or larceny, except for damage to the building caused by burglars. If the dwelling has been vacant for more than 60 straight days before a vandalism or malicious mischief loss, or any ensuing loss, there is no coverage. A dwelling under construction is not considered to be vacant.
Missing from the named perils available on the CFP policy that can be found on the Coverage C named perils of the HO 00 03 policy are theft, falling objects, weight of ice and snow, accidental discharge or overflow of water or steam, freezing, and sudden and accidental damage from artificially generated electrical current.