I own a cabin in the California foothills. My insurer non-renewed me due to “Wildfire Risk.” I had to go onto the state “FAIR Plan” for $4,000/year, but I just realized the FAIR Plan only covers fire. It doesn’t cover liability, theft, water damage, or guest injuries. I am running a rental with zero liability protection.
Key Takeaways
- The FAIR Plan is NOT Full Insurance: State-run plans (California FAIR, Florida Citizens) are “policies of last resort.” They usually cover Fire and Smoke ONLY.
- Difference in Conditions (DIC): To run an Airbnb on a FAIR Plan, you need a separate “Difference in Conditions” (DIC) policy to wrap around it. This covers Liability, Theft, Water, and Guest issues.
- Loss of Income: FAIR Plans often have very low limits for Fair Rental Value. If the cabin burns, you might only get $10k for income, even if you lose $80k in bookings.
- Commercial Carriers: Some surplus lines carriers (like Lloyd’s of London) will write full policies in fire zones, but premiums are high (
6k−6k−10k).
The “Why” (The Trap)
The trap is the “Liability Gap.”
Hosts buy the FAIR Plan to satisfy their mortgage lender (who requires fire coverage). They forget that the lender doesn’t care about a guest slipping in the shower. The FAIR Plan provides $0.00 for liability. If a guest sues you, you are uninsured.
The Investigation: I Called Them
- California FAIR Plan: Confirmed. “Named Peril policy: Fire, Lightning, Internal Explosion.” No liability. No theft. No water backup.
- Bamboo / Aesir (DIC Providers): I asked for a “Wraparound” policy for a short-term rental. They fill the gaps. They cover the liability and water damage that the FAIR plan excludes.
- Proper Insurance: In some fire zones, they can write a policy. If the risk is too high, they might decline, or write “Ex-Wind/Fire” and tell you to get the FAIR plan for the fire portion.
Comparison Table: Fire Zone Options
| Feature | FAIR Plan Only | FAIR Plan + DIC (Wrap) | Surplus Lines (Lloyds) |
| Fire Coverage | YES | YES (Via FAIR) | YES |
| Guest Liability | NO | YES | YES |
| Theft/Water | NO | YES | YES |
| Loss of Income | Low Limits | YES (Enhanced) | YES |
| Cost | High | Very High (Combined) | Very High |
[IMAGE: Map showing ‘High Fire Severity Zones’ in red, with an insurance policy stamped ‘Non-Renewal’]
Step-by-Step Action Plan
- Don’t Rely on FAIR Alone: If you have the FAIR plan, buy a DIC/Wraparound policy today. You are currently exposed to every risk except fire.
- Check “Loss of Use”: Ensure your DIC policy covers “Business Income” for the 2 years it takes to rebuild in a fire zone (permits take forever).
- Hardening the Home: Clear brush 100 feet back. Install ember-resistant vents. Some insurers will only quote you if you send photos of this “defensible space.”
- AirCover is Secondary: Remember, AirCover liability is there, but relying on it as your only liability coverage in a high-risk zone is reckless.
FAQ
Will AirCover pay if a wildfire burns the house?
No. AirCover is for guest damage. It does not cover natural disasters.
Why is my premium $8,000?
Because one spark costs the insurer $500,000. It’s the cost of doing business in 2026 climate conditions.
Can I pass the cost to guests?
Yes. Raise your nightly rate. Do not skimp on coverage to save $50/booking.