FAIR PLANS

The extensive inner-city rioting that took place in the United States in the mid-1960s led to the withdrawal from those areas of much of the availability of property insurance. 

This made it very difficult for mortgage companies and lenders to operate in those areas and, thus, difficult for individuals to meet insurance requirements and remain in those areas. This compounded the downward trend of inner-city areas.

In response, the government acted in 1968 to provide riot insurance under a federal reinsurance plan.

 To obtain this insurance, states were required to develop plans through which inner-city property could be insured at reasonable rates. Such plans are called Fair Access to Insurance Requirements

(FAIR) plans. Although the original legislation under which the plans were created has been repealed, FAIR plans still exist in many states.

Although it is not a type of insurance policy, the FAIR planaddresses the issue of property insurance availability. Essentially, a FAIR plan makes insurance available to risks that were previously considered uninsurable because of environmental hazards. 

These are defined as conditions surrounding the property of an insured that might increase the chance of a loss but that are not within the control of the property owner or tenant occupying that property.

Under a FAIR plan, no application for insurance may be rejected simply because of environmental hazards that are beyond the insured’s control, although the property may be subject to inspection before it is accepted in the plan