On October 9th, Massachusetts Governor Deval Patrick signed S-465, an Act Relative to Liability Coverage under the Massachusetts Property Insurance Underwriting Association, into law and is now Chapter 346 of the Acts of 2014. This law enables property owners to obtain both property and liability coverage in one policy, rather than paying more for two separate policies.
Once this new law goes into effect on January 8, 2015, the Massachusetts Property Insurance Underwriting Association (MPIUA) — also known as the Massachusetts FAIR Plan — is required to have liability, not just property, coverage included in its Non-Owner Occupied Dwelling policy for one-to-four residential units.
Currently, if a property owner of an investment dwelling with one-to-four residential units could not obtain the Non-Owner Occupied Dwelling policy in the standard voluntary market, they would have to obtain property coverage from the FAIR Plan and purchase separate liability coverage from the surplus lines market.
Now that the FAIR act allows for the combination of the two coverages, underwriting mortgages and validating insurance coverage in force will be significantly easier. However, there is some concern that expansion of MPIUA policy will create greater liability for the state, as liability risks that could not be underwritten in the voluntary market are now underwritten by the taxpayer.