California P&C Law — Cancellation, Unfair Practices, FAIR Plan, CAARP & Ethics

Correct

The answer is B: To fill gaps by adding coverages the FAIR Plan does not sell, such as liability and theft.

The FAIR Plan sells named-perils basic property insurance; its dwelling policy builds in fire, lightning, internal explosion and smoke, with some other perils sold as options, and it does not sell liability, theft or water damage coverage. A Difference in Conditions policy from a private insurer is designed to combine with the FAIR Plan policy and supply those missing coverages; flood and earthquake are typically separate policies. It does not replace the FAIR Plan policy, act as excess fire coverage, or pay the FAIR Plan deductible.

Reviewed in our October 2026 California fact-check.

Correct

The answer is C: A small florist with one delivery van that is entitled to liability insurance but cannot get it in the voluntary market.

CAARP is the plan that apportions applicants for automobile liability insurance among admitted insurers. Under Insurance Code §11620 it serves applicants who are in good faith entitled to that insurance but unable to procure it through ordinary methods, and commercial vehicles can qualify. The florist fits. The homeowner's problem is property insurance, which is the FAIR Plan's field; workers' compensation is not automobile liability insurance; and a company that holds a standard-rate offer can get coverage through ordinary methods, so it is not eligible.

Reviewed in our October 2026 California fact-check.