What Is the Texas FAIR Plan?
The Texas FAIR Plan Association (TFPA) is a state-mandated insurance program that provides residential property coverage to homeowners who cannot obtain insurance through the private market. Created by the Texas Legislature in 1995 and activated in 2002, the FAIR Plan serves as Texas’s insurer of last resort.
With average homeowners insurance rates increasing by 21% in Texas last year and many insurers withdrawing from high-risk areas, the FAIR Plan has seen unprecedented growth. Applications surged to 41,234 policies in 2024 the highest increase on record, with projections reaching nearly 135,000 policies by the end of 2025.
Why Was the Texas FAIR Plan Created?
The FAIR Plan was established to address a critical insurance availability crisis in Texas. In 2002, when mold damage claims exceeded $2 billion, several major insurers exited the Texas market, leaving thousands of homeowners unable to secure coverage. The Commissioner of Insurance activated the dormant FAIR Plan legislation to provide a safety net for these property owners.
Today, the program addresses ongoing challenges including extreme weather events, rising construction costs, and insurer pullbacks from coastal and high-risk areas, particularly Harris County and the Gulf Coast.
Who Qualifies for Texas FAIR Plan Coverage?
The Texas FAIR Plan is specifically designed as last-resort coverage. To qualify, you must meet strict eligibility requirements:
Primary Eligibility Requirements
You must have proof of denial from at least two insurers: Applicants must have two declinations from other insurers licensed to write residential property insurance in Texas.
You cannot have current coverage: You cannot hold an existing homeowners policy, renewal offer, or valid comparable coverage offer from another licensed Texas insurer.
Your property must meet underwriting standards: Properties cannot be condemned, vacant, or in disrepair, and there are restrictions on properties with excessive liability exposures like certain dangerous animals or unfenced pools.
Claims history matters: Generally, you cannot have more than eight paid insurance claims (excluding glass claims) within the past three years.
No insurance-related offenses: You cannot have convictions for arson, fraud, or other insurance-related crimes.
Geographic Availability
The Texas FAIR Plan is available statewide, but with important restrictions. Windstorm and hail coverage are excluded for properties in Texas’ 14 first-tier coastal counties and portions of Harris County east of State Highway 146. These counties include Aransas, Brazoria, Calhoun, Cameron, Chambers, Galveston, Jefferson, Kenedy, Kleberg, Matagorda, Nueces, Refugio, San Patricio, and Willacy.
Property owners in these designated catastrophe areas must purchase separate windstorm and hail coverage through the Texas Windstorm Insurance Association (TWIA).
What Does Texas FAIR Plan Cover?
The FAIR Plan offers four types of residential property insurance:
1. Homeowners Insurance (HO-A)
Standard homeowners coverage for owner-occupied single-family homes.
2. Dwelling Fire Policies (TDP-1)
Coverage for rental properties or homes not occupied by the owner. TDP-1 policies must provide coverage for fire and lightning, with coverage for additional perils being optional.
3. Condominium Insurance
Coverage for condo unit owners.
4. Tenant (Renters) Insurance
Personal property and liability coverage for renters.
Coverage Limits
Dwelling coverage extends up to $1,000,000 maximum, with other structures covered at 10% of the dwelling amount. Personal property coverage varies by policy type, with homeowners policies offering 50%, 60%, or 70% of dwelling coverage. Liability coverage is available at $100,000 or $300,000 limits, with medical payments at $5,000 per person/$25,000 per occurrence.
Covered Perils
Texas FAIR Plan policies cover approximately 10 named perils:
- Fire and lightning
- Windstorm and hail (except in designated coastal areas)
- Explosion
- Riot or civil commotion
- Aircraft and vehicle damage
- Vandalism and malicious mischief
- Smoke damage (sudden and accidental)
- Theft
- Falling objects
- Freezing of plumbing, heating, and air conditioning systems
Important Coverage Limitations
Unlike comprehensive homeowners policies, FAIR Plan coverage has significant restrictions:
Limited water damage protection:
The coverage severely limits protection from water-related losses compared to standard policies.
Actual cash value for personal property:
Unless you pay extra for replacement cost coverage on certain policy types, personal property is covered at depreciated value.
No flood coverage:
The FAIR Plan does not provide flood insurance. You must purchase separate flood coverage through the National Flood Insurance Program (NFIP) or private insurers.
Named perils only:
Coverage is limited to specifically listed perils, unlike “all-risk” policies that cover everything except what’s excluded.
New Development: Property Owners’ Association Coverage
In a significant expansion, FAIR Plan began offering property owners’ association insurance in October 2025. This coverage, authorized by House Bill 998 from the 88th Legislature, provides insurance for condominium and homeowners’ associations that cannot find coverage in the voluntary market.
The maximum liability limit for property owners’ association insurance is set at $3,000,000 for commercial structures, acknowledging the different risk profile these associations present compared to individual residential properties.
How Much Does Texas FAIR Plan Cost?
Texas FAIR Plan insurance is significantly more expensive than traditional homeowners coverage because it insures higher-risk properties.
A FAIR Plan policy costs around $4,250 for coverage with $300,000 in dwelling protection—roughly 46% higher than the Texas state average. Some sources report average annual costs around $1,440, though this varies considerably based on coverage limits selected.
Your specific premium depends on multiple factors:
- Property location and risk exposure
- Home’s age, size, and construction materials
- Coverage limits and deductibles selected
- Claims history
- Credit score
- Optional coverages added
The higher cost reflects the elevated risk profile of properties that have been declined by multiple private insurers. However, FAIR Plan coverage remains more accessible than being uninsured or obtaining surplus lines coverage at even higher rates.
How to Apply for Texas FAIR Plan Insurance
You cannot apply directly to the Texas FAIR Plan. You must work with a licensed Texas property and casualty agent who will submit the application on your behalf.
Step-by-Step Application Process
Step 1: Seek coverage in the voluntary market:
Apply to at least two licensed insurance companies currently writing residential policies in Texas. Keep all denial letters as proof.
Step 2: Find an authorized agent:
Use the Texas FAIR Plan Association website to locate a licensed agent authorized to submit FAIR Plan applications. Any agent licensed to write property and casualty insurance in Texas can become authorized.
Step 3: Gather required documentation:
Prepare proof of insurance denials, property details (age, construction, square footage), information about past claims, and details about your property’s condition.
Step 4: Complete the application:
Work with your agent to complete the application accurately. Your agent will verify eligibility and ensure all required information is included.
Step 5: Property inspection:
Your home may require an inspection, and if so, TFPA notifies you and sets up an inspection date.
Step 6: Select coverage and payment plan:
Once approved, choose your coverage limits and select from 2-pay, 4-pay, or 10-pay installment options.
Payment Options
TFPA accepts payments through multiple methods:
- Online at texasfairplan.org
- By phone at 800-933-9551
- By mail to: Texas FAIR Plan Association, P.O. Box 733916, Dallas, TX 75373-3916
You can set up automatic recurring payments through your bank account. Note that once you choose your payment plan during application, you cannot change it later.
Policy Terms and Reapplication Requirements
Texas FAIR Plan policies are issued for one-year terms. An important requirement: every two years, policyholders must reapply for coverage in the voluntary market.
If you are once again denied by at least two insurers and don’t receive a comparable coverage offer, you can reapply for FAIR Plan coverage. This requirement ensures the program serves its intended purpose as temporary, last-resort coverage while encouraging homeowners to return to the private market when possible.
Recent Financial Challenges and Assessments
The Texas FAIR Plan has faced significant financial challenges due to increasing claims from extreme weather events. In December 2024, FAIR Plan assessed participating insurers $17.6 million for its 2023 deficit, and in September 2025 assessed $60.1 million for its 2024 deficit.
These assessments are distributed among all insurance companies writing residential property insurance in Texas. Insurers can recoup these costs by adding surcharges to policyholders’ premiums over a three-year period, meaning even those not using the FAIR Plan may see increased costs on their property insurance.
Strengths and Limitations of the Texas FAIR Plan
Key Benefits
Access when others won’t insure:
The primary benefit is obtaining essential property coverage when no other options exist.
Statewide availability:
Coverage is available throughout Texas, not just in specific regions.
Standard coverages included:
Basic dwelling, liability, and personal property protections are provided.
Legitimate last resort:
Significant Drawbacks
Higher premiums:
Expect to pay 40-50% more than standard market rates for less comprehensive coverage.
Limited perils covered:
Policies cover fewer perils than standard homeowners insurance, with severe limits on water damage, falling trees, glass breakage, and plumbing freezing.
Reduced personal property coverage:
Maximum coverage for belongings is typically 50-70% of dwelling coverage, with actual cash value (depreciated) payment unless you purchase replacement cost coverage.
No coastal windstorm coverage:
Properties in 14 coastal counties and parts of Harris County must obtain separate windstorm/hail coverage through TWIA.
Claims processing concerns:
Some policyholders report challenges with claims processing and communication, particularly during widespread catastrophic events.
Financial stability rating:
Weiss Ratings assigned TFPA a safety rating of E-, indicating concerns about financial strength, though the program has backing from all participating insurers and state oversight.
Alternatives to Consider Before the FAIR Plan
The Texas FAIR Plan should be your last option after exhausting other possibilities:
Work with Independent Insurance Agents
Independent agents have access to multiple carriers and can identify insurers you might not know about. They work for you, not a single company, and can shop your risk across their entire network.
Consider Surplus Lines Insurance
Surplus lines carriers (non-admitted insurers) can sometimes provide coverage when standard insurers decline. While premiums are higher, coverage may be more comprehensive than the FAIR Plan.
Make Property Improvements
Updating your roof, installing storm shutters, upgrading electrical and plumbing systems, or adding security features can make your property more attractive to insurers. Some homeowners find that modest improvements open doors with private carriers.
Increase Your Deductible
Accepting a higher deductible demonstrates you’re willing to share more risk, which can sometimes make insurers more comfortable offering coverage.
Bundle Policies
Some carriers will write homeowners coverage if you also purchase auto insurance from them. The combined relationship may provide the comfort level they need.
Who Should Consider Texas FAIR Plan?
The FAIR Plan is appropriate for:
- Homeowners who have been legitimately declined by multiple insurers
- Properties in high-risk areas where private insurers have withdrawn
- Homes with characteristics that make them difficult to insure (older construction, prior claims history, challenging locations)
- Temporary coverage while making improvements to qualify for voluntary market insurance
- Property owners who need coverage immediately and have no other options
Who Should Avoid the FAIR Plan?
You should continue seeking alternatives if:
- You haven’t thoroughly explored the voluntary market with an independent agent
- You received offers from private insurers, even if expensive
- You have a current policy and renewal offer
- Your property improvements could make you eligible for standard coverage
- You haven’t shopped all available surplus lines options
Understanding Harris County’s Dominant Share
An important data point: over 58% of TFPA policies are for properties in Harris County. This concentration reflects the challenges Houston-area homeowners face, including exposure to hurricanes, flooding, hail, and aging infrastructure. The significant withdrawal of private insurers from Harris County has made the FAIR Plan a critical resource for Houston metro residents.
The Future of Texas FAIR Plan
With climate change driving more frequent and severe weather events, and construction costs continuing to rise, the FAIR Plan faces ongoing pressure. The program’s rapid growth—from 11,174 policies in 2023 to over 41,000 in 2024—indicates increasing stress on the voluntary insurance market.
The addition of property owners’ association coverage and continued financial deficits requiring industry assessments suggest the FAIR Plan’s role will likely expand rather than contract in coming years. Homeowners should view FAIR Plan coverage as a bridge to more comprehensive insurance rather than a permanent solution.
Frequently Asked Questions
Can I get Texas FAIR Plan if I’ve been denied by only one insurer?
No. You must provide proof of denial from at least two insurance companies licensed to write and currently writing residential property insurance in Texas.
Does Texas FAIR Plan cover manufactured homes?
Yes. The FAIR Plan covers manufactured and mobile homes, provided the wheels are removed and the unit is properly tied down.
Can I cancel my FAIR Plan policy if I find better coverage?
Yes. If you secure coverage in the voluntary market, you can cancel your FAIR Plan policy. Standard cancellation procedures apply.
What happens if I file a claim with Texas FAIR Plan?
Claims are processed by the FAIR Plan’s servicing carriers. While the program provides legitimate coverage, some policyholders have reported slower processing during major catastrophic events affecting large numbers of claims simultaneously.
Can businesses get FAIR Plan coverage?
No. The Texas FAIR Plan only covers residential properties. Commercial properties must seek coverage through other channels, including the surplus lines market.
Does the FAIR Plan offer payment plans?
Yes. You can choose 2-pay, 4-pay, or 10-pay installment options when applying. However, you cannot change your payment plan after selecting it during application.
The Texas FAIR Plan provides essential insurance coverage for homeowners who cannot obtain policies through normal channels, but it should be viewed as temporary, last-resort protection. Coverage is less comprehensive and more expensive than voluntary market insurance, with significant limitations on covered perils and personal property protection.