FOR IMMEDIATE RELEASE:                                                               
December 26, 2006                                                                                        
                                                                                                                       

“As I See It”

A disturbing situation has come to my attention affecting many residents in my district.  Homeowners of three-deckers and multi-dwellings are being charged higher premiums for homeowner insurance simply because the home is a three-decker.  As a result, I decided to take action and file legislation for the upcoming session aimed at reducing homeowner insurance premiums for three-decker homes that have skyrocketed out of control in Worcester. 

Insurance premiums are calculated by a number of factors, the most important of which is the replacement value of the home.  In the past, insurance companies would base premiums on a smaller percentage than the total replacement cost, usually less than 50%.  Recently, however, homeowner insurance companies increased the percentage of replacement value to upwards of 80%.  This translates into homeowners seeing a 300% increase in homeowner insurance premiums in just one year.

For a real life example, I examined two copies of a homeowner’s insurance bill for consecutive years on a three-decker home.  Last year, the homeowner’s premium was $1,475.00, based on a less than total replacement cost of $280,000.  Next year, this same home, with no major improvements made, will pay a premium of $4,125.00, based on a total replacement cost of $758,000.00.  The new premium is based on 80% of the $758,000.00 total replacement cost for the three-decker home.  For this homeowner, an increased burden of $2,650.00 per year in homeowner’s insurance premiums will undoubtedly affect not only this working-class homeowner, but also the people that pay rent as tenants.  In the unfortunate event of a total loss, the homeowner will never receive a check for the full replacement value because in this day and age we are not rebuilding three-deckers in Worcester.
 
Senior citizens on fixed incomes and working-class people that are barely managing to make ends meet will be severely impacted by these increases.  At some point, government must step in to protect these people.  I am no proponent of big government, but I believe that government has a role to play in people’s lives; government must help those in need of help.

As a State Legislator, I feel it is my obligation to intervene when a private industry threatens the well being of my constituents.  I certainly hope the reasoning behind these drastic increases are not result of the losses insurance companies sustained from disasters around the country, i.e. Florida and New Orleans.     
 
I feel as through the insurance companies’ decisions to arbitrarily and drastically increase rates are not only unethical, but also against public policy.  Also, knowing full well homeowners of three-deckers would not collect the full replacement cost of the home is beyond belief.  Therefore, I find it my obligation to file legislation limiting insurance companies from automatically basing premiums on more than 50% of the replacement cost for a three-decker.  During this upcoming legislative session, I will aggressively seek quick passage of this bill.  We must not allow insurance companies to put corporate profits ahead of the safety and well being of our hard working families and senior citizens.  I call on the residents of Worcester to support this measure and I promise to fight hard on Beacon Hill to protect the best interests of homeowners and renters.

John P. Fresolo