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A client wrote to us recently with a question we suspect a lot of homeowners have:
“On my statement, there’s the breakdown of Dwelling, Other Structures, and so on. I was under the impression that the dwelling is covered by the FAIR Plan, not by my companion policy. So I was a bit confused as to why it showed up here.”
Good question, and the answer is simpler than it looks. Both policies list a dwelling limit because both policies cover your house. They just cover it against different things.
The California FAIR Plan is a named-peril policy. It covers a specific, short list of causes of loss: fire, lightning, internal explosion, and smoke. Vandalism and malicious mischief can be added as an optional coverage for additional premium, so it’s worth checking whether yours includes it.
That list leaves out most of what actually damages a house. A burst pipe behind a wall. Theft. A guest who slips on your front steps. The job of a companion policy is intended to pick up potential gaps in coverage, and is called a Difference in Conditions, or DIC, policy. There are a number of different carriers that can offer a DIC/companion policy, and it’s important to make sure this is in place. It is intended to pick up the perils the FAIR Plan doesn’t touch and adds personal liability, so the two policies together make a fairly complete policy.
So when Dwelling appears on your companion policy statement, it isn’t a duplicate of what the FAIR Plan already covers. It’s the rebuild limit for your house under that second set of perils. If a fire takes the house, the FAIR Plan should respond. If a supply line lets go and floods three rooms, the companion policy should respond. Same house, same structure, two different triggers.
Two policies also means two of everything else. Two deductibles. Two renewal dates. Two bills.
More importantly, both policies should have matching effective dates, and match dwelling limits, so if they don’t, please make sure you check with your agent (or us!), to get that corrected. If one policy gets updated at renewal and the other doesn’t, you can end up with an unintended gap that goes unnoticed until there’s a claim. It is usually an easy update to make, but it just takes somebody looking.
There’s no such thing as a silly question about a declarations page. That’s what we’re here for. If a line item on either statement looks off, or you’d like a second set of eyes on whether your limits still line up, send us an email at hello@schaubinsurance.com and we’ll walk through it with you. We understand that not everyone thinks about insurance, like we do, and we want to make sure you understand what you’re buying!
This article is for general informational purposes only. Coverage depends on the terms of your individual policy, and final coverage decisions are made by your insurance carrier and the adjuster assigned to your claim.
