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If you’ve been stuck on the California FAIR Plan, you’re not alone. The good news is that you may have alternatives. Understanding the difference between admitted and nonadmitted insurers can help you explore those options and compare what you’re being offered.

An admitted insurer is licensed by the California Department of Insurance, and its rates generally require state approval. Admitted insurers like State Farm, USAA, and Mercury also participate in the California Insurance Guarantee Association. CIGA provides limited protection for qualifying claims if the company becomes insolvent. For dwelling coverage, that protection is generally capped at $1 million or the policy limit, whichever is less.

A nonadmitted, or surplus-lines, insurer can cover homes that admitted companies decline. These carriers have more flexibility in pricing and policy terms because they operate outside California’s standard rate and policy-approval system. They can offer eligible coverage through licensed surplus-lines brokers. That flexibility comes with tradeoffs. California’s regulatory authority is more limited, policy provisions can differ significantly, and CIGA does not protect policyholders if a nonadmitted insurer fails.

Non-admitted carriers such as Kin and Delos offer California homeowners insurance programs worth investigating. Some use detailed property data and wildfire modeling to evaluate homes that other companies decline. Delos, for example, emphasizes geospatial technology and wildfire science in its approach. Always be sure to identify the actual underwriting company responsible for paying claims, which may differ from the brand offering the quote. It can get even more confusing. Bamboo offers both admitted and non-admitted coverage, both underwritten by parent Mitsui Sumitomo Insurance in Japan.

Where does the FAIR Plan fit? It is a statutory insurer of last resort, backed by member insurers without taxpayer funding. Its basic coverage focuses on fire and related perils. Homeowners typically need a companion “Difference in Conditions” policy for additional protection, including liability, theft, and water damage.

Compare that combined package with any proposed replacement policy. Does it provide actual cash value or replacement-cost coverage? Is the dwelling limit adequate? Check coverage for bringing the home up to current code requirements, personal property losses, additional living expenses, and exclusions.

Check deductibles carefully. A wildfire deductible of two percent of a $1 million dwelling limit means paying $20,000 toward a covered loss. Ask whether wildfire has a separate deductible and exactly how it is calculated. If you are willing to accept a high wildfire deductible, your premium savings can be substantial.

It’s easy to focus on finding any available policy. But either carrier type can leave you underinsured. Compare coverage and confirm replacement coverage is in force before canceling existing policies.

Getting off the FAIR Plan may be possible, but availability depends on your home, location, and the insurer’s current requirements. Keep checking with your broker, and ask for written explanations of important differences so you can make an informed, confident decision.

For a current list of carriers writing new policies in the Santa Cruz mountains, email dave@thewildfireguys.com or visit thewildfireguys.com/insurerlist.

Excerpted from California Homeowners Guide to Wildfire and Insurance, Chapter 17, California Homeowners Insurance, by Dave Millman. Available on Amazon at www.amazon.com/dp/B0HGDLQKP8.