PORTLAND, Ore. (KOIN) – As the threat of wildfires has increased in recent years, insurance companies throughout Oregon and the Western United States have been adjusting their underwriting and informing more and more customers that they will not be renewing their home policy due to the risk. 

Some homeowners will turn to other insurance providers, only to find out that no company will insure their property. 

That’s when the Oregon FAIR Plan comes in. 

The Oregon FAIR Plan is a nonprofit that serves as a last-resort property insurance provider for homeowners who can’t get insurance elsewhere. After many intense wildfire seasons within the last decade, Executive Director Phil Benson said the demand for the Oregon FAIR Plan’s services has been growing. 

“Most people are willing to take any insurance rather than no insurance, especially if they have a mortgage on your property,” he said. 

Benson has held his position with the Oregon FAIR Plan for 22 years, but won’t sugarcoat the services the nonprofit provides. It does insure homes, but the coverage is not nearly as good as what private companies can offer. 

The Oregon FAIR Plan only writes property insurance. It doesn’t write casualty or liability insurance, which private companies often include in their home and property risk coverage. 

Instead, the Oregon FAIR Plan covers what Benson calls “specific perils.” These perils include fire, extended coverage (things like windstorms, hail, explosions, riots, civil commotion, aircraft, vehicles, smoke and volcanic eruption), and vandalism.  

The coverage won’t cover things like water damage or theft. 

The program is not only helpful to people who are denied coverage due to their wildfire risk, but also to people who’ve experienced water damage, burglary losses or previous theft on their property that resulted in their insurance provider dropping them. 

“We are the market of last choice,” Benson said. “We only write the things that nobody else wants.” 

In fact, in the application to receive coverage for the Oregon FAIR Plan, applicants are asked how many times they’ve been declined by insurance companies. An applicant must be denied by at least two insurance carriers before they can come to the FAIR Plan. 

The Oregon FAIR Plan was created by the Oregon Legislature in 1971. Oregon and dozens of other states developed similar programs after insurance providers stopped renewing policies due to things like civil unrest and brush fires in the mid-1960s. 

The programs ensured that businesses and residents would have some sort of insurance option available if their provider decided to not renew their policies. 

The Oregon FAIR Plan operates as a nonprofit and is funded by the premiums its customers pay for their insurance policies 

The premiums cover the cost of the nonprofit’s heating and power bills, pay employee salaries and replenish the surplus account. 

Just like traditional insurance companies, the Oregon FAIR Plan’s surplus account is what’s used to cover the cost of claims. Benson said they usually have between $3 million and $5 million in the surplus account. 

Oregon law requires every insurance company that operates in the state to be a member of the Oregon FAIR Plan. This means if the FAIR Plan’s claims ever exceed its surplus, it can request clearance from the state insurance department to make an assessment. An assessment allows it to contact all the insurance companies in the state and require them to pay a certain amount within 30 days. 

If they don’t pay within that amount of time, Benson reports them to the state insurance department and their license could be suspended. 

Each company is asked to pay an amount based on the percentage of policies they write throughout the state. Together, the amount the Oregon FAIR Plan receives from each company in the assessment will cover the cost needed for the claims that exceeded its surplus. 

In Benson’s 22 years with the nonprofit, he’s never had to make an assessment. He’s been able to stay within the Oregon FAIR Plan’s budget and operate within its income stream. 

However, he said 2020 was the year they came closest to doing so. The Oregon FAIR Plan lost money after 15 different homes it ensured near Detroit Lake were completely destroyed in the Santiam Canyon wildfires. 

Anyone who thinks they need to sign up for the Oregon FAIR Plan should talk to their insurance agent. Every state-licensed insurance agent is able to provide coverage through the Oregon FAIR Plan. Benson said when companies send a letter announcing their decision to not renew a home insurance policy, the Oregon FAIR Plan is often mentioned in one of the last paragraphs of the letter. 

In a perfect world, Benson said a program like the Oregon FAIR Plan wouldn’t be necessary. Insurance companies would cover customers no matter their status or situation. But since that isn’t the case, he said the Oregon FAIR Plan will continue to be an option for people who need it. 

“It’s kind of a secret weapon,” Benson said. “It’s like an island in the storm for people who need it when they need it.”

The Oregon Division of Financial Services said anyone having problems obtaining home or property coverage should first speak to their agent or insurance company. The next step is the Oregon FAIR Plan or the surplus lines market.