THE INSURANCE QUANDARYIf you own a home on Cape Cod, you’re familiar with escalating insurance costs and restricted coverage on local homes. Directly related to storms and natural disasters, rising insurance costs on the Cape trace their genesis to Florida’s Hurricane Andrew in 1989 and Cape Cod’s Bob in 1991. The ensuing devastation wreaked havoc with insurance companies, forcing many smaller firms out of business. The extent of damages caused by both storms prompted Massachusetts insurance companies to study the effects of a major catastrophe on Cape Cod. With the advent of storm modeling computer techniques the industry found itself able to project data accurately, both locally and globally. As a result, underwriting for coastal properties began to change, with flood and wind-related damages commanding high premiums or no longer being covered. Subsequent to the 1989/1991 distasters, the Massachusetts Property Insurance Underwriting Association’s FAIR Plan became available to the general public. A private entity, it is funded by Massachusetts insurance companies, but is controlled by the state legislature. New to Massachusetts and unique on Cape Cod, this concept is common in other parts of the US where natural disasters occur more frequently (earthquakes in California, tordadoes in Kansas). Over the years, it has become a insurance market of last resort, offering underwriting for basic homeowner’s insurance, including second and seasonal homes. This is good news for buyers and sellers on the Cape. As with other insurers, however, there are specific prerequisites for qualification. You can check out the Massachusetts FAIR Plan’s web site at www.MPIUA.com. AMERICAN HERITAGE REALTY |
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