The Massachusetts Property Insurance Underwriting Association (FAIR Plan) has agreed to pay $350,000 to resolve allegations that it wrongly cancelled homeowners insurance policies over a four-year period, according to Attorney General Maura Healey.
According to court documents, the residual market insurer will pay the monies to settle allegations that terminated hundreds of policies each year between January 2010 and February 2014 in violation of state law.
Healey said the 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.
“This agreement ensures that the FAIR Plan treats policyholders appropriately when it is considering cancelling policies,” Healey said.
Under Massachusetts law, after a homeowners insurance policy that has been in effect for 60 days can only be cancelled for a limited number of reasons, such as nonpayment of premium. According to the AG’s office, the FAIR Plan “frequently inspected insured properties after 60 days and then impermissibly cancelled policies in instances where the it did not approve of the property’s condition.”
The FAIR Plan provides coverage to homeowners who have been unable to purchase insurance through the private market.
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