In the news coverage of the tragic California wildfires, we’re hearing stories about people losing insurance coverage when State Farm and other carriers “drop” them or decline to renew policies. These discussions usually include references to the California “FAIR Plan” that’s available to California residents and businesses. What we haven’t heard too much is an understandable explanation of just what exactly a FAIR Plan actually is.
Numerous states have their own version of Fair Access to Insurance Requirements plans, or FAIR Plans. Regardless of how they might differ, each of these state-mandated property insurance plans are basically designed to provide homeowners and businesses with property insurance if they are not able to secure a policy through the standard insurance marketplace.
In Massachusetts, if a homeowner cannot find an insurance company to provide coverage, they can seek coverage through the Massachusetts Property Insurance Underwriting Association (MPIUA). As a residual market insurance association, the MPIUA requires participation by all companies that provide property insurance in Massachusetts. These member companies share losses on a premium volume basis. MPIUA offers policies under the Homeowners, Dwelling Fire and Commercial Property programs as approved by the Massachusetts Division of Insurance.
This Massachusetts FAIR Plan provides insurance to homeowners who cannot obtain coverage in the voluntary insurance market. This is critical for Massachusetts based property owners who have “high risk” properties that are in areas with dangerous weather or other hazards (e.g., fire or proximity to water).
Massachusetts FAIR Plan participants can usually secure coverage for the home and its contents, depending on the location. The cost of a FAIR Plan policy in Massachusetts can often exceed private insurance, and typically provides a lower level of coverage. Because of issues relating to coastal erosion near expensive waterfront homes, the Massachusetts FAIR Plan often provides the only option for homeowners who have been dropped or denied insurance by private insurance carriers.
If your property is considered “high risk” and you cannot get home insurance through private companies, check out the Massachusetts FAIR Plan as an option. If you have any questions, speak to your local insurance agent. As always, SMW is also available to provide guidance and answer any questions.
