Mortgage Relief

February 28, 2008

Representative Bradley Co-Sponsors bill to Protect Consumers of Homeowner’s Insurance

Boston- Representative Garrett J. Bradley (D-Hingham) co-sponsored legislation to protect homeowners who purchase their property and casualty insurance through the Massachusetts Property Insurance Underwriting Association, the so-called FAIR plan. More than 125,000 families in Massachusetts purchase homeowner's insurance through the FAIR plan because they are otherwise unable to obtain coverage.

Last month, the Supreme Judicial Court upheld the FAIR plan's 2005 rate increases, which included an annual increase of as much as 25% in cities and towns across Cape Cod and Southeastern Massachusetts. The Court based the key part of its decision on one sentence in a 2004 amendment to the FAIR plan statute that contains rate caps intended to protect homeowner's from sudden rates hikes. The sentence has the effect of allowing insurers to pass on to homeowners the impact of the industry's application of Florida's recent hurricane experience to coastal New England. Of course, our hurricane experience is very different from Florida's; only five hurricanes have made landfall anywhere in New England in the past half century.

“I feel that this is a big step moving forward for residents of coastal communities, said Bradley. For many residents, the FAIR plan is the only way that they can insure their home and this legislation will help control major increases in the future.”

This legislation would keep in place the up to 25% increases which went into effect in October 2006 and what are likely to be similar increases approved by the Insurance Commissioner for the following year, but would reestablish some limits going forward.

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