The Massachusetts Property Insurance Underwriting Association (MPIUA), which operates the FAIR (Fair Access to Insurance Requirements) plan, is adjusting its policies in a move that could expand home insurance options for residents of Martha’s Vineyard. This change is particularly significant given the island’s high home insurance premiums and cancellation rates.
For years, insurance agents on the Vineyard have been advocating for the FAIR plan to increase its coverage cap. The previous limit of $1 million left many homeowners with limited options, especially as the average home sale price on the island climbed to $1.6 million.
According to insurance experts, this modification is a positive step. “It’s an olive branch,” said Paula O’Connor, executive vice president of Mone Insurance in Vineyard Haven. The FAIR plan was established by the state legislature in 1968 to offer insurance to those denied coverage by other companies in the standard market, without receiving state funding.
Frank O’Brien, general counsel for the MPIUA, explained that the alteration was prompted by concerns about the challenges of securing insurance in Massachusetts amid rising property values. “This is a mechanism that we are trying to utilize to respond to a need,” Mr. O’Brien stated.
Starting April 15, consumers can obtain coverage through the FAIR plan for the first $1 million of a property’s value, then seek a separate policy for the balance. This approach mirrors a successful program in North Carolina. After securing coverage with the FAIR plan, homeowners have a 30-day window to obtain additional insurance. If they are unsuccessful in finding the extra coverage, the FAIR plan will still cover up to $1 million without penalty, Mr. O’Brien said. “What we are trying to do is create a structure where people have at least something,” he said.
However, there are some drawbacks, O’Connor noted. She emphasized that the FAIR plan requires all homes in flood zones to also have flood insurance. This could make it too expensive for many Vineyard residents to utilize the FAIR plan, despite the relaxed coverage limit. “That’s going to hurt a client a lot financially,” she stated. “[It’s a] good news, bad news situation.”
The Vineyard market has experienced significant insurance premium increases in recent years, which are partially due to high property values, the island’s proximity to the water, and wider market impacts experienced in other areas. Richard Soo Hoo, the chief operating officer of Sterling Insurance in Vineyard Haven, noted that there are signals that insurance prices might stabilize soon. His agency had previously had difficulty finding coverage for properties exceeding the $1 million limit from the FAIR plan. He had already heard from a partner broker who was preparing a new insurance plan based on the FAIR plan changes. “It will be good to have for the next unfavorable cycle though and hopefully the corresponding excess policy will be available by then as well,” he said.
