The most common insurance plan on the Island, which several thousand locals rely on, has announced a new policy change that will make it possible to fully insure homes worth over a million dollars.
The Massachusetts Property Insurance Underwriting Association, also known as the FAIR Plan and that 36.6 percent of Island homeowners use, has announced on Thursday that homeowners using the insurance will be able to bolster their coverage with an excess and surplus market that rounds out their policy without being penalized. Previously, the FAIR plan capped coverage at $1 million.
The latest development comes with many Islanders frustrated about the rising cost of insurance, with some worried they’ll be priced off the Island. While the policy change won’t reduce the cost of insurance, it will provide additional protections for homeowners relying on the insurance group.
Owner of Tashmoo Insurance in Vineyard Haven Joe Gervais said he doesn’t see this making a drastic change in the local market, but it’s a step in the right direction.
“We’re all happy to have more people who want to write home insurance on Martha’s Vineyard. This will make the market more competitive,” Gervais said.
In this new vision of the FAIR Plan, a homeowner who uses their insurance would be able to supplement any rebuilding cost of their home that exceeds the $1 million with a separate policy. There will be no co-insurance penalty, and the FAIR Plan will support homeowners in pursuing this extra coverage, but won’t assist with the process. That part is up to the local resident.
FAIR Plan representatives say that the proposal is part of their effort to provide a system of better coverage for Massachusetts homeowners.
“This is something that has been in place and has worked fairly well,” general counsel for the FAIR Plan Frank O’Brien said. “We took the idea from the North Carolina Beach Plan, which is kind of like a FAIR plan, but covers beach risks. And what it does — it is a way for us to continue to offer coverage for these risks, but also put something in place that people can get covered for the larger risks.”
On the local levels, Gervais said it will be a while until homeowners see the effects of this change in the home insurance market, but it is something he’ll recommend to clients who qualify and express interest. And as of now, the surplus-lines market has not yet been developed.
“We’ll have to wait a couple weeks until it’s available,” Gervais said. “They’ll see how this works and we’ll revisit this.”
in this market $1,000,000 is not unusual and it’s not just a Vineyard issue. There are many properties that are standard 3 or 4 bedroom houses in the 1,500 to 2,500 square foot range on the Cape that are selling for over a million. The way this is being set up is a bit complicated. Given the market a better solution would be for the FAIR plan to reevaluate it’s cap. But, at least this is a start.
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