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Weather Events Cause Rates To Rise For Homeowners Insurance Massachusetts Needs

By Mike Heuer

The cost of insuring homes in Massachusetts has gone up in recent years due mostly to Mother Nature. Although located in a northerly clime, Massachusetts suffers from a wide variety of perils driven by nature, including tornadoes, snowstorms, windstorms, flooding and even hurricanes. As a result, rates for homeowners insurance Massachusetts residents need is on the rise.

Since 2011, when Tropical Storm Irene hammered the Atlantic coast and caused a great deal of damage in Massachusetts s well as bad snowstorms and tornado activity, rates have been going up on homeowners insurance Massachusetts homes need for protection. Even the state’s insurer of last resort, the FAIR Plan, has boosted its rates as a result.

The average rate for homeowners plans in the state were about $800 per year as of 2006. But with the reduction in home ownership that occurred in Massachusetts and the rest of the United States during the housing market correction of 2009, determining actual average rates in the state has been difficult since. Most likely, homes in Massachusetts average about $900 per year or more to insure, which is right about what the national average is as well, according to the National Association of Insurance Commissioners.

Nearly 2 million homes are insured in Massachusetts, and most if not all of them have had their rates go up during the past couple years as a result of storm damages and other causes. Although the rate increases must be approved by state officials with the Massachusetts Division of Insurance, insurers have filed for rate increases of as much as 20.5 percent with many being approved. Rate increases must not be excessive and need to be justified in order for state officials to approve them.

After the rate increases take effect, homes will cost an average $1,100 per year to insure in the Bay State, according to the Massachusetts Division of Insurance. That makes rates for homeowners insurance Massachusetts homes need even more than the national average by about $200, according to the National Association of Insurance Commissioners. And they likely will go higher.

The Massachusetts Property Insurance Underwriting Association administers the FAIR Plan, which underwrites coverage for about 10 percent of homes in the Bay State. With 200,000 homes insured through it, rates have not gone up much since 2007, but officials recently requested a 7 percent increase for policies that protect homes and lesser increases for condominium and renters insurance policies.

Officials with the Massachusetts Property Insurance Underwriting Association submitted more than 2,000 pages of supporting documents and solicited numerous expert witness testimonies to support their request for the rate increases. During 2012, a similar request for boosting rates for the FAIR Plan were defeated based on the premise they were not justified by the Massachusetts Property Insurance Underwriting Association.

But association officials this time came in prepared, and a recent hearing was held during which the evidence was presented. While a decision is yet to be made, the likelihood of rates rising is much greater than a year ago. Even if denied, the rates likely will rise by a smaller margin, possibly over the next several years.