Premiums for sinkhole insurance through the Missouri Property Insurance Placement Facility, also known as the FAIR Plan, are decreasing, state insurance regulators say.
The new rate structure, which is the result of an actuarial study conducted by the FAIR Plan, became effective Feb. 1, according to the Missouri Department of Insurance.
The plan started issuing the standalone Sinkhole Loss Policy in 2015 to supplement an applicant’s primary coverage. Previously, a policyholder with $200,000 of coverage would have paid $2,010 annually. However, under the new rate structure the policyholder will pay $313 for the same coverage.
“These new rates will make sinkhole coverage affordable to more Missourians who need it,” said Missouri Department of Insurance Director John M. Huff. “Homeowners who have questions about coverage should contact the FAIR Plan.”
Sinkholes are depressions or holes in the ground caused by collapses in the layers below the surface. They can form gradually or suddenly. Most homeowners policies exclude sinkhole coverage and few insurance companies offer the coverage even on an optional basis.
Senate Bill 691 enabled the FAIR Plan to provide Missourians with access to sinkhole insurance coverage. Sinkhole coverage through the FAIR Plan will insure homes and the personal belongings of the homeowner from damage resulting from the abrupt collapse of the ground. The FAIR Plan coverage will not cover damage resulting from settling foundations.
Damage resulting from an earthquake is not covered under most homeowners insurance policies and it is not covered by the FAIR Plan.
The FAIR Plan was established in 1969 to make property insurance available to applicants who aren’t able to secure insurance through the normal insurance market. The FAIR Plan is not intended to be competitive with the voluntary insurance marketplace, but instead is designed to be used as a last resort to obtain basic property insurance.
Source: Missouri Department of Insurance, Financial Institutions & Professional Registration
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