(Boston, MA – Insurance News and Markets) – The Massachusetts Property Insurance Underwriting Association (FAIR Plan) will pay $350,000 to settle allegations of impermissibly cancelled homeowners insurance policies between January 2010 and February 2014.
The assurance of discontinuance notes that the FAIR Plan will pay $350,000 to settle allegations that it has been cancelling hundreds of policies each year in violation of state law. This payment will be used to provide relief to homeowners who had to purchase more expensive force-placed policies after their FAIR Plan policies were cancelled. The affected homeowners are located all over the state, with concentrations in Boston, Brockton, Springfield, and Worcester.
“A home is frequently someone’s largest investment and homeowners should be treated fairly when they purchase insurance to protect that investment,” AG Healey said. “This agreement ensures that the FAIR Plan treats policyholders appropriately when it is considering cancelling policies.”
Under Massachusetts law, after a homeowner’s insurance policy has been in effect for 60 days, it can only be cancelled for a limited number of reasons, such as nonpayment of premium. The FAIR Plan frequently inspected insured properties after 60 days and then impermissibly cancelled policies when the plan did not approve of the property’s condition.
The FAIR Plan is a statutorily created entity jointly run by the state’s property insurance companies. It is designed to provide coverage at reasonable rates to homeowners who have been unable to purchase insurance through the open market. The FAIR Plan is frequently the only option for homeowners who live in urban areas or along the coast.
Source: Office of the Attorney General of Massachusetts.