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17.9 Residual Markets

Fair Access to Insurance Requirements (FAIR) Plan​

The Ohio FAIR Plan Underwriting Association provides basic property and homeowners insurance to qualified Ohio property owners who cannot obtain coverage through the standard insurance market. All property insurers conducting business in Ohio are required to participate as members of the association.

The Association is required to provide coverage only when the person or property would otherwise qualify for insurance in the normal insurance market except for its location and meets reasonable underwriting standards. Coverage may not be denied because of:

  • The condition of surrounding properties when those conditions are outside the applicant’s control
  • An environmental hazard alone

Coverages​

Basic property insurance under the FAIR Plan provides coverage for direct property losses based on the standard fire policy, including:

  • Fire
  • Lightning
  • Explosion
  • Extended coverage endorsements
  • Liability coverage, as approved by the Superintendent

The Association is also authorized to provide coverage for losses caused by:

  • Burglary
  • Robbery
  • Theft

The Association may require vandalism and malicious mischief coverage to be purchased together with extended coverage.

The Association may provide mine subsidence insurance to its policyholders. However, it is not authorized to provide coverage for automobiles or manufacturing risks.

Application and Policy Issue​

Upon request, a licensed insurance agent may assist a property owner in completing an application for coverage through the Association. However, the agent may not represent themselves as an agent of the Association and has no authority to bind coverage or accept a risk on the Association’s behalf.

Every policy issued by the Association must include an additional condition requiring that:

  • At least 2 insurers authorized to conduct business in Ohio have declined the coverage requested by the applicant
  • There are no outstanding taxes, assessments, penalties, or charges against the property to be insured
  • The applicant has not received written notice from an authorized public entity stating that the property violates any building, housing, pollution, sanitation, health, or fire safety code, ordinance, or rule

If an inspection identifies property violations, the Association may require the applicant to provide a detailed plan for correcting those violations.

If the Association determines that identified violations can be corrected within a reasonable period and the applicant otherwise meets underwriting requirements, it may issue a basic property insurance policy or binder, provided that:

  • The applicant follows the correction plan according to schedule
  • The property is re-inspected
  • Required repairs are started within 30 days after the application date

Coverage will not be provided if repairs are not started within the 30-day period.

Once the Association receives the required premium, it will issue the policy with coverage effective the following day. Policies issued by the Association have a term of 1 year.

Commissions on Association policies must be paid to the resident licensed agent designated by the applicant. Nonresident agents are not eligible to receive commissions for Association risks.

Maximum Limits of Liability​

The Association’s maximum coverage limits are:

  • $1.5 million per location for basic property and homeowners insurance
  • $10,000 for residential crime insurance
  • $15,000 for commercial crime insurance

FAIR Plan Binders​

Each application must clearly inform the applicant that a binder is available. To obtain a binder, the applicant must pay the estimated premium.

A binder becomes effective at 12:01 AM on the day after the estimated premium is submitted. However, coverage cannot begin earlier than 12:01 AM on the 16th day after the application is submitted.

If, through no fault of the applicant, the Association has not completed an inspection and provided a quote within 15 calendar days after receiving the application, it will issue a binder upon payment of the estimated premium.

If an inspection cannot be completed at the time of application through no fault of the inspector or the Association, the 15-day period does not begin until the property becomes available for inspection.

Binders:

  • Must be issued for a specific period of time
  • May not remain in effect for more than 1 year

The effective date of the policy is the same as the effective date of the binder. Policies issued in this manner are not subject to flat cancellation.

A binder remains in effect until either:

  • The risk is accepted and a policy is issued; OR
  • The risk is declined, the binder is cancelled, and the applicant is given the reason for the cancellation.

Once the Association accepts the risk, it calculates the actual premium. If the actual premium is higher than the provisional premium already paid, the insured must pay the additional amount due. If the actual premium is lower, the insured will receive a refund of the difference.

If the property does not meet the Association’s underwriting requirements, the binder will be cancelled on a pro rata basis. If the applicant requests cancellation, the binder will be cancelled according to the cancellation provisions of the approved coverage forms.

Ohio Automobile Insurance Plan​

Ohio’s Automobile Assigned Risk Plan provides auto insurance to individuals who cannot obtain coverage through the standard insurance market. All insurers authorized to provide automobile insurance in Ohio are required to participate in the plan.

When an insurer cancels or nonrenews an automobile policy for a reason other than nonpayment of premium, the notice must inform the insured of the availability of the Ohio Automobile Insurance Plan and explain how to apply for coverage.

The plan must file annual audited financial reports with the Superintendent and comply with all required filings for policy forms, endorsements, rates, and rating plans.