California FAIR Plan for Rental Property and Condos: Fair Rental Value, Occupancy and What to Add

The California FAIR Plan insures rental property and condos on the same dwelling policy it sells to homeowners, form CFP 00 01. What changes is the occupancy you declare and the coverages you check. The plan writes one to four unit rentals leased for at least a year, seasonal rentals rented for less than a year, tenants' belongings, and condominium unit owners' belongings and improvements.^[1] For a landlord, the coverage that matters most is Fair Rental Value, which replaces lost rent after a covered fire. The policy pays it at no more than 1/12 of its limit a month.^[2] The policy does not include liability. Total losses are settled at actual cash value unless you add replacement cost, and the limit is $3 million at one location.^[2][3]

This guide is for the owner of a rental house, a duplex to fourplex, a vacation rental or a condo who has been sent to the FAIR Plan. For what the plan is, how it's priced and how to leave it, read the main California FAIR Plan guide. If you haven't had the regular market checked yet, a dwelling fire quote for the rental comes first.

Which FAIR Plan policy does a rental or condo need?

It depends on who lives there and for how long. The plan's dwelling page lists five occupancies:^[1]

• Owner-occupied: a one to four unit dwelling where the owner lives in one or more units
• Seasonal rental: a dwelling rented in whole or in part for less than one year
• Rental: a one to four unit dwelling rented to a tenant for at least one year
• Renters: personal property of a tenant in an apartment or house
• Condominium unit owners: personal property and improvements of a condo unit owner

Short-term and vacation rentals fall under "seasonal," the occupancy for anything rented for less than a year. The application asks directly whether any part of the dwelling is rented for less than a year.^[4] Five or more units, or a building owned by a business, goes on the commercial program instead. Our guide to the FAIR Plan commercial policy covers apartment buildings and HOA master policies.

The table below turns the policy form into a checklist for each type of owner. The FAIR Plan column comes from form CFP 00 01 (05/2026) and the plan's application checklist. The last column lists what the FAIR Plan never provides.

Sources for the table: occupancies,^[1] coverages and exclusions,^[2] separate guest house application.^[4]

How does Fair Rental Value work on a FAIR Plan policy?

It pays the rent you lose while a covered loss keeps the rented part of the property unfit for use. It pays at most 1/12 of the Fair Rental Value limit for each month, based on a 30-day month, and never more than that part's monthly rental value.^[2] From that it deducts expenses that stop while the unit is out of use. It covers only the shortest time needed to repair, and it continues after the policy expires if the repair is still underway.^[2]

There are two layers of limit:

1. Built in. You may use up to 10 percent of the Coverage A dwelling limit for lost rent. Whatever you use comes out of the dwelling limit for the same loss.^[2]
2. Purchased. If Fair Rental Value is checked on your declarations, the policy pays up to the scheduled limit, in addition to the built-in 10 percent.^[2] The plan's application checklist (revised January 2021) says the purchased limit can be up to 50 percent of the dwelling limit, or 50 percent of the improvements limit for a condo unit owner.^[4]

The 1/12 rule decides how much a long rebuild will pay. Say a house rents for $4,000 a month and you buy a $24,000 Fair Rental Value limit. That pays no more than $2,000 a month, so half the rent is lost for every month of a rebuild. To get the full $4,000 each month for a whole year, the limit would need to be $48,000. The same arithmetic works for any rent: multiply the monthly rent by 12, and set the limit there if you want a full year covered.

A few other rules apply. If you have personal property coverage, Fair Rental Value is based on a furnished equivalent. Without it, the basis is unfurnished. If a civil authority blocks access because of a covered loss next door, the policy pays up to two weeks. Lost rent from a cancelled lease is not covered.^[2] Fair Rental Value is the only loss of use coverage on the form. There is no separate additional living expense coverage, which is why the difference in conditions guide warns about how the DIC's own loss of use is triggered.

What does the FAIR Plan dwelling policy cover for landlords and condo owners?

The base perils are fire or lightning, internal explosion, and smoke. The policy defines smoke to include windborne soot, ash and char from outside fires. It excludes smoke from fireplaces, fire pits, barbecues and other flames used on purpose.^[2] Windstorm or hail, explosion, riot, aircraft, vehicles and volcanic eruption apply only if Extended Coverages is checked. Vandalism applies only if Vandalism or Malicious Mischief is checked.^[2] The checklist says vandalism is available only with Extended Coverage.^[4]

For a landlord, the property parts work like this:

• Coverage A, Dwelling: the building, attached structures, and building and outdoor equipment used to service it.^[2]
• Coverage B, Other Structures: detached garages, sheds and fences. The policy excludes other structures rented to anyone who isn't a tenant of the dwelling, unless the structure is used only as a private garage, and structures used for business or farming.^[2] A rented guest house needs its own application.^[4]
• Coverage C, Personal Property: property usual to a dwelling, owned or used by you or family members living with you, while it's at the insured address. Business personal property, meaning inventory and equipment used in your business, is excluded.^[2] If you furnish a short-term rental, ask your broker how the plan treats those furnishings before you rely on Coverage C.
• Improvements, Alterations and Additions: a condo unit owner or tenant may use up to 10 percent of Coverage C for improvements made at their own expense to the part of the property only they use. A separate, higher limit can be scheduled.^[2]

How are FAIR Plan rental losses settled?

Unless you add replacement cost, the base form pays actual cash value. On a total loss, that is the building's value before the loss measured by fair market value, up to the limit. On a partial loss, it is the repair cost less depreciation.^[2] For an older rental, the gap between fair market value and the cost to rebuild can be large.

The fixes are endorsements, and each needs a checkmark on the declarations:

• Dwelling Replacement Cost. Pays the cost to rebuild without depreciation, if the dwelling limit is at least 80 percent of the full cost to rebuild at the time of loss.^[2] The checklist says it's automatically included for dwellings 25 years old or less unless declined. Older dwellings need a roof updated within the past 25 years, and mobile or manufactured homes are not eligible.^[4]
• Extended Dwelling Coverage. Adds 25 percent above the dwelling limit, priced as if the limit were 25 percent higher.^[4]
• Inflation Guard. Raises the dwelling and ordinance or law limits at renewal using construction cost factors. The policy still says it's your job to pick an adequate limit.^[2]
• Ordinance or Law. Code upgrades are excluded unless you buy this coverage. The checklist caps it at 10 percent of the dwelling limit.^[2][4] Our ordinance or law guide explains why older rentals need it.

If the combined limits exceed $1.5 million, the application needs current exterior photos and a rebuild estimate from a licensed contractor or appraiser. The dwelling limit must be at least that estimate.^[4] The most one policy can carry is $3 million at one location. The Plan of Operation counts adjacent houses on separate parcels as separate locations, even if one landlord owns them all.^[3]

What does the FAIR Plan dwelling policy leave out for rentals?

Liability, theft, water damage and long vacancies are the big gaps.

Liability. The dwelling form insures property only. The Department of Insurance describes the FAIR Plan as a fire policy without liability or burglary coverage.^[5] A landlord can be sued over injuries on the property, so this is the gap to close first.

Theft and tenant damage. Even when vandalism is added, it excludes theft and burglary (except burglars' damage to the building) and alterations to rental property made without the owner's permission.^[2]

Water, flood and earthquake. Flood, surface water, sewer backup and groundwater are excluded, as is earthquake.^[2] The plan points owners to difference in conditions, flood or earthquake policies to supplement it.^[1]

Vacancy. Vandalism is not covered if the dwelling was vacant or unoccupied for more than 30 straight days before the loss. The policy calls a dwelling unoccupied when no one is lawfully living in it.^[2] A building vacant or unoccupied for more than a year, unless because of construction, isn't eligible at all.^[3] If a rental sits empty between tenants, tell your broker, and look at vacant property insurance if the gap will be long.

What should landlords and condo owners buy with it?

A companion policy that adds liability, theft and water damage, with limits and dates matched to the FAIR Plan policy. The FAIR Plan's DIC page says difference in conditions policies supply water damage, theft and liability, and that the plan doesn't sell them.^[6] The Department of Insurance keeps a list of insurers that do.^[7] DIC programs differ in the occupancies they accept, so tell the broker whether the property is owner-occupied, leased, seasonal or a condo unit.

Menlo quotes the DIC wrap for homes and condo units with fire coverage in force. For a rental, compare the FAIR Plan plus DIC total against a single landlord policy or a dwelling fire policy from a non-standard market. A DP3 form with premises liability can sometimes cover the rental on one policy. Condo owners should also have their condo unit policy or DIC checked for loss assessment, since the HOA's master policy may itself be a FAIR Plan commercial policy with the gaps described in our commercial guide.

How do I get a FAIR Plan policy for a rental?

Through a licensed broker registered with the FAIR Plan. Plan staff can't advise on coverages or limits, and the plan doesn't estimate rebuilding cost.^[8] Each dwelling needs its own application.^[4] A broker may not charge a fee for placing coverage only with the FAIR Plan.^[5]

Menlo Insurance Services is a licensed California broker (license 6020106) and a registered California FAIR Plan broker. We check the regular and surplus lines markets for the rental first, place the FAIR Plan dwelling policy if they decline, and quote the companion coverage at the same time so the dates line up. Start with a dwelling fire quote and include the occupancy, the monthly rent and the year the roof was replaced.

The same hardening discounts apply to rentals as to homes. A dwelling fire policyholder who earns all 12 may see up to 16.4 percent off the wildfire portion of the premium.^[9]

This guide is for educational purposes. It summarizes the California FAIR Plan dwelling policy CFP 00 01 (05/2026), the plan's application checklist and Plan of Operation, and public California Department of Insurance guidance, as of September 2026. Your policy's terms, conditions and endorsements control. Menlo Insurance Services is a licensed California broker and earns a commission on policies it places.