How do I insure a vacation rental in a wildfire area?
Short answer
In California, if regular insurers won't cover your rental, the FAIR Plan sells a limited fire policy (fire, lightning, internal explosion and smoke, up to $3 million for a home) with no liability coverage and no theft coverage. To get closer to a full homeowners policy, you pair it with a difference in conditions (DIC) policy from a separate insurer. You still need coverage written for paid stays, so confirm every gap with a licensed agent.
In a high wildfire risk area, the hard part is often finding any insurer that will write the home at all, before you even get to rental use. In California, the fallback is the FAIR Plan, which covers much less than a normal homeowners policy. This page explains, from the California Department of Insurance (CDI) and the FAIR Plan's own site, what the FAIR Plan does and doesn't do. It then covers how hosts usually fill the gaps and what to ask before you sign.
Checked on Nov 4, 2026. Coverage rules change, so read your own policy and declarations page. This is not insurance advice; confirm your coverage with a licensed agent or broker, in writing. For the general picture, start with short-term rental insurance basics.
What the FAIR Plan is
The CDI's FAIR Plan page (opens in a new tab) describes it this way:
- It's for California homes and businesses that can't get insurance from a regular insurer.
- It was created by the Governor and Legislature but is a private association run day to day by insurance companies. The CDI oversees it.
- Its current policy is a limited fire policy. Limits go up to $3 million per location for residential policies and $20 million for commercial.
- There's a wildfire-hardening discount on the wildfire part of the residential premium.
How to get it. The CDI says to shop the regular market first. If you still can't get coverage, apply through a licensed agent or broker, or contact the FAIR Plan at 800-339-4099. The FAIR Plan's dwelling page (opens in a new tab) says not all brokers are registered to sell its policies, so it suggests contacting more than one. It has a broker finder on cfpnet.com (opens in a new tab).
Rental occupancy. The FAIR Plan's dwelling page lists a "Seasonal Rental" category, for homes rented in whole or part for less than one year. That's the closest fit for a vacation rental. Tell the broker exactly how you rent the home.
What the FAIR Plan covers and doesn't
From the FAIR Plan's dwelling fire policy form (opens in a new tab), effective Mar 17, 2026:
| Item | In the dwelling fire policy? |
|---|---|
| Fire or lightning, internal explosion, smoke | Yes, the named perils |
| Windstorm, hail, riot, aircraft, vehicles, volcanic eruption | Only if you add the optional extended coverage |
| Vandalism or malicious mischief | Only if added. Excluded if the home was vacant or unoccupied for more than 30 days in a row before the loss |
| Lost rent after a covered loss (fair rental value, Coverage D) | Only if added |
| Liability (a guest is hurt, or you damage someone's property) | No. The policy covers property only |
| Theft and burglary | No |
| Flood, surface water, sewer or drain backup | No |
The CDI's fact sheet on residential insurance and the FAIR Plan (opens in a new tab) (Jan 13, 2025) names water damage, theft and liability as examples of what a separate add-on policy can cover. The CDI's FAIR Plan page says a fuller residential option with liability, theft and water damage is planned. The FAIR Plan's homepage did not describe one as available when we checked.
What that means for a rental. With only a FAIR Plan policy, that policy would not pay for a guest injury, a stolen TV or flood water. Because guests are on the property, the missing liability coverage is the gap to close first.
Difference in conditions (DIC) policies
A DIC policy, sometimes called a wrap-around policy, is a second policy from a regular insurer, sold to sit alongside a FAIR Plan policy. The CDI's list of DIC insurers (opens in a new tab) says these products complement a FAIR Plan policy so you end up with the same or similar coverage as a traditional homeowners policy. You hold both policies. The list names 18 insurers.
Points from the CDI's fact sheet:
- To match a full homeowners policy, each FAIR Plan policy would need its own DIC policy.
- From 2020 to 2023, there was roughly one DIC policy for every two FAIR Plan policies, so many FAIR Plan holders have no DIC.
The rental question. The CDI's DIC list doesn't say whether any of these policies cover a home rented to paying guests. Before you buy, ask the DIC insurer in writing. The next section explains why rental use is the sticking point.
Short-term rental endorsements vs dedicated STR policies
The National Association of Insurance Commissioners (NAIC), the group of state insurance regulators, says in its home-sharing guide (opens in a new tab) (Mar 19, 2020):
- Most homeowners or dwelling policies are not designed to cover accidents from short-term rentals.
- A home listed often may be treated as a home-based business, which many policies exclude or limit.
- Options include a home-sharing endorsement on your current policy, on-demand coverage in some states or a landlord policy.
How the two main paths differ in practice:
- Endorsement. It's added to a homeowners policy you already have. Ask how many rental nights it allows, and whether it covers liability to paying guests or only property.
- Policy written for short-term rental use. It's built around paid stays from the start. Ask whether the carrier offers one for your area and your wildfire score, and whether it can sit with a FAIR Plan policy in place of a DIC.
What AirCover doesn't do. Airbnb's host liability article (opens in a new tab) says its $1 million host liability coverage applies to stays booked on Airbnb, so it gives you nothing for Vrbo or direct bookings.
Questions to ask an agent
Ask for the answers in writing, and ask the agent to point to the policy wording.
Rental use
- Does this policy cover a home rented to paying guests for less than 30 days? How many nights a year?
- Is there a business-use exclusion that applies to my rental?
- Does vacancy between stays, or a long off-season, affect any coverage? (The FAIR Plan form's vandalism coverage has a 30-day vacancy rule.)
Liability
- What is my liability limit for a guest injury, and does it apply on every booking channel?
- Can I add an umbrella policy on top, and will the umbrella insurer accept a FAIR Plan plus DIC setup?
Amenities and equipment. The NAIC notes that rental equipment like bikes or kayaks may have limited or no liability coverage, so ask about each item you provide:
- A hot tub or pool
- Kayaks, paddleboards or canoes
- Bikes and e-bikes
- A fire pit or grill (check local fire rules too)
Alcohol
- If I leave a welcome bottle of wine or guests bring alcohol, am I covered for liquor liability?
- Is liquor liability excluded?
Loss of income
- If a covered fire or smoke damage closes the home, does the policy pay lost rent? How is it calculated, and for how long? (On the FAIR Plan form, this is the optional fair rental value coverage.)
- Does it pay if a wildfire evacuation or a road closure stops bookings but the home isn't damaged?
Contents and the property
- Are guest-use furnishings, linens and appliances covered as personal property, or treated as business property?
- Is replacement cost available, or only actual cash value?
- Does the policy include debris removal and ordinance or law coverage for rebuilding to current code? Both are optional endorsements on the FAIR Plan form.
Wildfire discounts
- What hardening or defensible space work lowers my premium?
- What proof does the insurer need?
Putting it together
One way to build coverage for a wildfire-area rental in California:
- Shop regular insurers first, using a broker who works with short-term rentals.
- If none will write the home, get a FAIR Plan dwelling policy with the optional coverages you need (extended coverage, vandalism, fair rental value).
- Add a DIC policy, confirmed in writing to cover rental use, for liability, theft and water.
- Consider an umbrella for extra liability.
- Keep your local permit current. Many Tahoe-area permits require fire or defensible space inspections. See the South Lake Tahoe rules and the vacation rental safety checklist.
Then put the premiums into your numbers. The profit calculator shows what one booking leaves after costs, and the break-even rate calculator shows how insurance moves your minimum nightly rate.
Run one stay's numbers
Enter a booking's nights, rate and costs. See what it leaves you after every fee.
Calculate what one stay leaves meFrequently asked questions
Does the California FAIR Plan cover liability for a rental?
No. The FAIR Plan's dwelling fire policy covers property only. Liability coverage has to come from another policy, such as a DIC or a policy written for rental use.
What is a DIC policy?
A difference in conditions policy is a second policy from a regular insurer, bought alongside a FAIR Plan policy to fill its gaps. The CDI says the pair is meant to give coverage the same as or similar to a traditional homeowners policy. The CDI lists 18 insurers that sell them.
Can I insure a vacation rental with the FAIR Plan?
The FAIR Plan's dwelling page lists a seasonal rental category for homes rented for less than a year. Tell the broker exactly how you rent the home and confirm in writing how it's classified.
Does AirCover replace my own insurance?
No. Airbnb's host liability coverage applies to stays booked on Airbnb, so it doesn't cover your Vrbo or direct guests. It also doesn't replace property coverage for the home.
Does the FAIR Plan pay lost rent after a fire?
Only if you add the optional fair rental value coverage (Coverage D). It pays for lost rent when a covered loss makes the rented part of the home unfit to live in.
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