Insurance Coverage and Payment Policies. Rapid Turnaround Neighborhood Preservation Research. Task Number 3

摘要

This study examined the claim that suburban residents are able to obtain insurance reimbursement for the replacement value of a residence destroyed by fire, while residents of older neighborhoods, are generally reimbursed for a lesser amount. The study was largely restricted to the District of Columbia and 26 states planning to provide Fair Access to Insurance Requirements (FAIR Plans). The five subject areas studied included: (1) variations across States in the basis for coverage and payment policies; (2) variations between suburbs and central cities or among neighborhoods; (3) differences between insurance companies; (4) differences between insurance from conventional sources and from the FAIR Plans; and (5) entities that have the jurisdiction and responsibility to eliminate differential practices, with particular emphasis on appropriate Federal actions. Results showed that the basis for coverage and payment policies varies across States and by geographic area. As a result, newer structures in inner cities may not receive the same replacement cost coverage as suburban structures. Within the limits set by State law, companies set their own policies on what kinds of coverage to write in different areas and on how to determine actual cash value. Except in Indiana, FAIR plan policies are not written at replacement cost. Only Massachusetts, Rhode Island, and Wisconsin offer actual cash value homeowners' insurance through the FAIR plan. State legislatures, State insurance commissioners, and the insurance companies are the only entities with responsibility for eliminating differential practices, many of which increased in response to growing arson problems. HUD should promote affirmative insurance demonstration projects and convene a forum for resolving cities' insurance problems. In many States, insurance companies will not agree to further Federally imposed requirements. Tables, footnotes, and a proposed outline for a forum on urban insurance issues are included.