Massachusetts Property Study Guide

Massachusetts property risk has a shape: it is coastal and non-seismic. Hurricanes and tropical storms on Cape Cod and the Islands, nor’easters along the whole shore, and winter storms inland. There is no earthquake story here and no wildfire story. That exposure profile drives the two Massachusetts institutions this part is really about — the FAIR Plan and the surplus lines market — plus one procedural rule that catches out-of-state producers every time.

Rate regulation: competitive, with one loud exception

Property rates in Massachusetts are competitive, file-and-use. Insurers file with the Division and the rates may not be excessive, inadequate or unfairly discriminatory (c. 174A §§ 5–6).

The loud exception is private passenger auto, which runs on managed competition — a system Massachusetts adopted in April 2008, abandoning the state-set “fix-and-establish” rates it had used for decades. Insurers now set their own auto rates, approved first by the Division. If a question contrasts property and auto rate regulation in Massachusetts, that is the distinction it wants.

Related, and heavily tested: credit history may not be used to underwrite or rate private passenger auto (c. 175 § 4E). That is an outright statutory ban, and it is a genuine Massachusetts distinctive — most states permit credit-based insurance scores. No comparable statutory prohibition was located for homeowners.

The FAIR Plan — MPIUA

The market of last resort is the Massachusetts Property Insurance Underwriting Association, known universally as the FAIR Plan (c. 175C). It operates as a joint underwriting association backed by the insurers writing basic property coverage in the Commonwealth. It is a mechanism, not a company competing for business.

Eligibility turns on a certification: the applicant must certify that a reasonable effort to obtain insurance elsewhere has been made and failed. Beyond that, the property must be residential and located in Massachusetts, maintained, not vacant or condemned, and free of outstanding tax liens.

What it covers: fire and smoke, vandalism and theft, limited liability, windstorm or hail, collapse from snow or ice, and vehicle or aircraft damage.

What it does not cover: flood. The FAIR Plan is not a flood solution — and on a coastal book that distinction comes up constantly.

Surplus lines — the sequence matters

When a risk cannot be placed in the admitted market, it goes to a non-admitted carrier through a surplus lines broker. Massachusetts governs this in c. 175 § 168, and the exam tests the order of operations more than any single fact.

First, you must already hold a special (surplus lines) broker licence issued by the Commissioner. A producer licence alone does not let you place non-admitted business.

Second, you must make a diligent effort to place the risk in the admitted market — and it must be a real search, not a formality.

Third, you document it by affidavit within 20 days. Exempt commercial risks are excused from the diligent-effort requirement.

A 4% premium tax applies to surplus lines placements. And the consequence that matters most to the insured: surplus lines placements are not protected by the Insurers Insolvency Fund. If the non-admitted carrier fails, there is no guaranty backstop. That is the reason the whole procedure exists, and it is how the exam usually frames the question.

Cancellation, briefly

Property cancellation has its own dedicated treatment in the Personal Lines material, but two figures belong here because they anchor everything else. A homeowners policy enjoys a 60-day new-business window during which the insurer may cancel relatively freely; after it, cancellation narrows to six enumerated statutory grounds (c. 175 § 99, Twelfth). And property nonrenewal requires 45 days’ notice with the specific reasons stated (§ 193P).