The basic property and casualty concepts are covered in the national basics guides: insurable interest, indemnity, negligence, occurrence and claims-made coverage, actual cash value and replacement cost. This guide collects the Massachusetts rules that apply across P&C lines:

• cancellation formalities
• the FAIR Plan
• required homeowners and liability coverages
• public adjusters
• rates
• the Insurers Insolvency Fund

The standard fire policy is in the Massachusetts dwelling guide, and auto rules are in the Massachusetts personal auto guide.

Cancellation formalities

• Mailing. A mailed cancellation notice works only if the insurer gets a U.S. Postal Service certificate of mailing receipt showing the insured's name and address. If a policy is payable to a mortgagee or other payee, that payee gets notice too (M.G.L. c.175 s.187C).
• Unpaid premium. If the insured never paid the premium, the insurer can cancel without tendering a return premium (s.187D).
• Offsetting premium. An insurer, agent or broker may deduct unpaid premium on the same policy from a claim payment if it has been unpaid 60 days after the effective date or original billing (s.22I).

Massachusetts FAIR Plan (c.175C)

• The Massachusetts Property Insurance Underwriting Association, known as the FAIR Plan, provides basic property insurance to eligible applicants who can't get it in the voluntary market.
• Programs: homeowners, dwelling fire and commercial property.
• Membership. Every insurer writing basic property insurance on a direct basis must be a member as a condition of its license.
• "Basic property insurance" includes fire and extended coverage, vandalism, and dwelling and homeowners coverages. It does not include auto.
• Non-owner-occupied dwellings. For liability coverage on a non-owner-occupied one-to-four unit dwelling, the applicant certifies it was denied liability coverage by at least two voluntary insurers.

Agents and the FAIR Plan (s.3):

• An agent may refuse an eligible applicant's request for a FAIR Plan inspection only if the applicant owes money for the coverage or won't arrange payment.
• Insurers may not penalize agents for submitting FAIR Plan applications.
• FAIR Plan commissions are set by the Commissioner after a hearing.

Required coverages

Heating oil releases (c.175 s.4D). Homeowners insurers and the FAIR Plan must offer owners of one-to-four unit homes coverage for heating oil leaks from residential tanks and piping:

• at least $50,000 per occurrence for first-party property damage
• at least $200,000 per occurrence for third-party liability and defense
• a deductible of no more than $1,000 per claim

Lead paint (c.175 s.111H). A liability policy on a pre-1978 residence whose owner holds a letter of full compliance or interim control must cover lead exposure injury claims, absent gross or willful negligence.

Public insurance adjusters (c.175 ss.162, 172)

What they handle. A public insurance adjuster represents the insured, for pay, on first-party property losses, including:

• fire and homeowners
• commercial multi-peril
• business interruption
• fidelity or crime policies

License requirements:

• age 21, a written exam and two years of property adjusting experience
• a three-year license, renewed with 15 hours of CE
• contracts in writing, on a form filed with the Commissioner

Rates

• P&C rates (c.175A s.5).
  • Rates may not be excessive, inadequate or unfairly discriminatory.
  • Classifications based on size, expense, management, experience, location or other reasonable factors are allowed if applied to all risks in substantially similar circumstances.
• Auto rates (c.175E). Auto rate manuals are filed 45 days before use. The Commissioner fixes auto rates only after finding competition insufficient.
• Fixed rates (c.175 s.182). Auto liability and workers' comp may not be sold at a rate other than the one fixed or approved.

Insolvency protection (c.175D)

• The Massachusetts Insurers Insolvency Fund pays covered claims of insolvent member P&C insurers.
• It doesn't pay first-party claims by a high net worth insured (s.12).
• Surplus lines policies must state that the Fund won't pay their losses (c.175 s.168(c)).

Common exam traps

• A mailed cancellation notice needs a USPS certificate of mailing, and mortgagees get notice too.
• Every basic property insurer must belong to the FAIR Plan, and the FAIR Plan doesn't write auto.
• Heating oil coverage must be offered with $50,000 first-party and $200,000 liability minimums, and a deductible of no more than $1,000.
• A public adjuster license requires age 21 and two years of experience, runs three years, and needs 15 CE hours to renew.
• Unpaid premium may be offset from a claim after 60 days.