Getting a non-renewal notice used to be a shopping problem. In today’s Texas market it can be the start of a dead end: two or three carriers decline the risk, and the homeowner lands on the Texas FAIR Plan without ever really choosing it. The plan’s own numbers show how common that path has become. What most new policyholders do not learn until claim time is that a FAIR Plan policy is thinner than the coverage they lost. This guide covers what it actually is, who qualifies, what it pays, and how to get off it, as of August 2026.
What the FAIR Plan is, and what it is not
The Texas FAIR Plan Association is a state-created insurer of last resort. The Legislature authorized a Fair Access to Insurance Requirements plan in 1995, and the Insurance Commissioner activated it in December 2002 during an availability crisis driven partly by mold and water damage claims, according to the Texas Department of Insurance’s overview of the association. Every insurer writing residential property insurance in Texas is a member and shares in the plan’s losses.
One distinction matters before anything else: the FAIR Plan is not the Texas Windstorm Insurance Association. The two are opposites. The FAIR Plan writes residential property coverage statewide, but under Insurance Code 2211.156 it may not provide windstorm and hail coverage in the designated catastrophe area, which consists of 14 coastal counties plus the parts of Harris County east of State Highway 146 in Pasadena, Morgan’s Point, Shoreacres, Seabrook, and La Porte. TWIA exists to cover exactly that gap: wind and hail only, coastal territory only. A FAIR Plan policy written in the catastrophe area carries a mandatory Windstorm and Hail Exclusion Agreement, and the owner buys wind coverage separately through TWIA. We compare that coastal wind market in detail in TWIA vs. private windstorm insurance. Everywhere else in Texas, the FAIR Plan policy does include wind and hail.
The growth numbers
TDI’s overview for the quarter ending March 31, 2026 puts hard numbers on the last-resort market. Policies in force stood at 66,512 at the end of 2021. By the end of 2024 the count had nearly doubled to 113,860, it peaked at 127,835 at the end of 2025, and it stood at 124,445 as of March 31, 2026. Total insured exposure grew even faster over the same window, from about $11.5 billion to $39.2 billion.
The geography is lopsided. Harris County alone holds 62,098 policies, about half the statewide total, followed by Fort Bend at 9,146 and Galveston at 8,566. But the plan is not purely a Gulf Coast story: Dallas, El Paso, and Tarrant counties each carry thousands of policies, largely homeowners the private market has priced out or declined over hail exposure. The plan wrote just over $300 million in premium in 2025.
Who qualifies
The eligibility rules come straight from the association and TDI. To get a FAIR Plan policy you must have been declined residential property insurance by at least two insurance companies licensed to write, and actually writing, residential property insurance in Texas. You also must not have received a valid offer of comparable coverage from a licensed Texas insurer. An offer from a surplus lines carrier does not count as a comparable offer, so an expensive non-admitted quote does not disqualify you. Applications go through any Texas-licensed property and casualty agent.
The plan also underwrites. Per the association’s eligibility page, it declines properties that are vacant, condemned, or in disrepair with existing damage, and applicants with more than eight paid claims in the prior three years, arson or insurance fraud convictions, or unusual liability exposures such as an unfenced pool or trampoline. Mobile homes must be tied down with wheels removed, and dwellings occupied for business use are ineligible.
Eligibility is also not permanent. Policies run one year at a time, and every two years the insured must reapply for coverage in the voluntary market. The FAIR Plan is built to be a waystation, not a destination.
What the policy covers
The plan offers four residential forms: a homeowners policy (HO-A), a dwelling policy (TDP-1) typically used for rental houses, a condominium policy, and a tenant policy. In October 2025 it also began writing property owners’ association coverage in a designated part of Harris County near Clear Lake.
These are named-peril policies. The HO-A covers fire, lightning, wind and hail (outside the catastrophe area), explosion, smoke, aircraft and vehicle damage, riot, vandalism, and theft, plus personal liability at a $100,000 or $300,000 limit and medical payments of $5,000 per person. The TDP-1 is thinner still: its base coverage is fire and lightning only, other perils are optional add-ons, and it carries no theft or liability coverage at all.
The caps, from TDI’s overview: dwelling coverage tops out at $1,000,000, other structures at 10% of the dwelling amount, contents at 50% of dwelling (increasable to 60% or 70% on the HO-A), loss of use at 10% of dwelling, and condo or tenant contents at $500,000. Deductibles are 1% or 2% of the coverage amount, and an insured with four or more claims in the prior three years loses access to the 1% option. If a percentage deductible is new to you, the math is the same as in the private market, and we walk through it in how wind and hail deductibles work in Texas.
What it excludes, and where claims disappoint
Three gaps catch new FAIR Plan policyholders most often.
Actual cash value settlement. The default loss settlement on both the dwelling and contents is actual cash value, which TDI’s overview defines plainly as replacement cost minus depreciation. A 15-year-old roof settled at ACV pays a fraction of what a new roof costs. The HO-A can be endorsed to replacement cost for an additional premium, and the association notes that replacement cost coverage requires insuring the home at full replacement value. The TDP-1 cannot be endorsed to replacement cost under any circumstances, which makes the FAIR Plan a rough landing for landlords.
Water damage. Sudden and accidental discharge from plumbing, one of the most common homeowner claims, is not a named peril on the base forms. The association’s HO-400 and HO-401 endorsements can add it, but with a hard cap of $5,000 for all water discharge losses during the policy period combined. Every paid water loss reduces the remaining limit. A typical slab leak or burst supply line can blow well past $5,000 before the flooring is addressed.
Flood and coastal wind. Like essentially all homeowners policies, the FAIR Plan does not cover flood; that requires a separate NFIP or private flood policy. And in the 14-county catastrophe area, as covered above, it cannot pay a wind or hail claim at all — that is TWIA’s territory.
What it costs
FAIR Plan rates are set by filing with the Insurance Commissioner, and the recent history has been steep. TDI’s rate filing chart shows homeowners rate increases of 10.0% effective August 2023, 10.0% in August 2024, and 10.8% in August 2025. The trend finally bent this year: TDI approved new FAIR Plan rates effective September 1, 2026 that produce a modest statewide average decrease for homeowners policies, with dwelling policy rates still rising, per the association’s announcement. The same announcement notes coverage limits on renewing policies will adjust upward by roughly 4% to track construction costs.
The pricing pressure is structural, not arbitrary. The FAIR Plan issues policies like an insurance company and pays normal claims and expenses out of the premiums it collects, but it holds no surplus the way a private carrier does. TDI’s overview describes it as a pooling mechanism: every insurer writing residential property in Texas is a member, and when losses exceed what premiums can absorb, the shortfall is allocated back across those member companies. The plan is designed neither to compete with the private market nor to undercut it, so its rates are not built to be a bargain.
Whether the FAIR Plan is expensive relative to the private market depends on what declined you. For context on what Texans pay generally, see our guide to homeowners insurance costs in Texas. The fairer comparison is coverage: at private-market-adjacent premiums, the FAIR Plan delivers ACV settlement, a $5,000 water cap, and named-peril coverage. You are usually paying comparable money for less policy.
Getting back to the private market
The two-year reapplication requirement makes exit mandatory in theory; making it real takes some work. Three things move the needle. First, fix what triggered the declinations, because carriers most often decline over roof age and condition, open damage, and claims frequency, and each of those is addressable. Second, shop every renewal, not every two years, since carrier appetites in Texas shift quickly and an independent agent can re-quote across many markets at once. Third, consider the surplus lines market as a middle step: a non-admitted carrier will often write a risk with replacement cost settlement and real water coverage, and because surplus lines offers do not count as comparable offers, exploring that market never jeopardizes FAIR Plan eligibility.
The plan does its narrow job: it keeps a mortgage-required policy on the house when nobody else will. Just read it as what it is — a floor, priced like a ceiling — and treat every renewal as a chance to leave.