Mississippi Homeowners Insurance

Mississippi homeowners insurance follows national standards but includes important state-specific requirements, especially for coastal properties exposed to hurricane risk.

Standard Homeowners Policy Forms

Mississippi uses ISO (Insurance Services Office) standard forms with state endorsements:

HO-3 Special Form (Most Common)

Other Homeowners Forms

Exam Tip: Know that HO-3 is the most common homeowners form in Mississippi. Coverage A and B use "special form" (all-risk) coverage, while Coverage C uses named perils.

Mississippi FAIR Plan

Purpose and History

The Mississippi Fair Access to Insurance Requirements (FAIR) Plan was created to provide essential property insurance to Mississippi residents who cannot obtain coverage through the voluntary market.

Historical Context:

• Established to ensure availability of wind and hail coverage
• Became especially critical after Hurricane Katrina (2005)
• Many insurers withdrew from Mississippi coastal market after Katrina losses
• FAIR Plan expanded to meet increased demand

FAIR Plan Coverage

FAIR Plan Application Process

1. Obtain Two Declinations

   • Apply to at least two admitted insurers
   • Receive written declination letters
   • Declinations must be dated within past 60 days

2. Submit FAIR Plan Application

   • Complete application with property information
   • Include two declination letters
   • Provide property inspection if required
   • Pay premium (typically higher than voluntary market)

3. Property Inspection

   • FAIR Plan may inspect property
   • Property must meet basic standards
   • Repairs may be required before coverage
   • Reinspection after required improvements

4. Policy Issuance

   • Coverage effective upon approval and premium payment
   • Annual policies with renewal rights
   • Must continue to seek voluntary market coverage

FAIR Plan Funding

The Mississippi FAIR Plan is funded through:

• Premiums: Policyholders pay premiums for coverage
• Assessments: All property insurers licensed in Mississippi participate
• Deficit Assessments: Insurers assessed for FAIR Plan deficits proportionally
• Catastrophe Funding: Special mechanisms for major hurricane losses

Exam Tip: The Mississippi FAIR Plan is a last resort for wind/hail coverage. Applicants must prove they've been declined by two admitted insurers within the past 60 days.

Hurricane Deductibles and Windstorm Coverage

Hurricane Deductibles in Mississippi

Mississippi law allows percentage deductibles for hurricane losses:

Hurricane Deductible Disclosure Requirements

Mississippi requires insurers to:

1. Written Disclosure

   • Clearly explain hurricane deductible terms
   • Show dollar amount of deductible at various coverage levels
   • Distinguish from standard policy deductible

2. Separate Acknowledgment

   • Insured must sign separate acknowledgment
   • Signature required at policy inception and renewal
   • Acknowledgment kept in policy file

3. Premium Comparison

   • Show premium difference between deductible options
   • Allow insured to choose deductible level
   • Document insured's choice

Example Hurricane Deductible Disclosure:

Hurricane Deductible Notice
Your policy includes a 5% hurricane deductible.

Coverage A (Dwelling): $200,000
5% Hurricane Deductible: $10,000

This deductible applies ONLY to hurricane losses when the Governor declares a hurricane emergency.
Your standard deductible ($1,000) applies to all other losses.

I acknowledge I have received and understand this hurricane deductible disclosure.

Signature: _______________ Date: _______________

Windstorm Exclusion Endorsement

Some Mississippi policies exclude windstorm coverage entirely:

When Used:

• High-risk coastal properties
• Properties with prior windstorm claims
• When insured obtains separate windstorm coverage (e.g., through FAIR Plan)

Disclosure Requirements:

• Must be clearly stated in policy
• Separate signature required acknowledging exclusion
• Notice must explain that windstorm is excluded

Exam Tip: Mississippi requires special disclosure and signature for hurricane deductibles and windstorm exclusions. Know that hurricane deductibles are percentage-based and typically apply only during declared hurricane emergencies.

Mississippi-Specific Policy Provisions

Mold Exclusion and Limited Coverage

Following extensive mold claims, Mississippi policies typically:

Flood Insurance Requirement

Mississippi is a National Flood Insurance Program (NFIP) participant:

• Private homeowners policies DO NOT cover flood
• Separate flood insurance required in flood zones
• Available through: NFIP or private flood insurers
• Mortgage requirement: Lenders require flood insurance in Special Flood Hazard Areas (SFHA)

Flood Insurance Coverage:

• Building coverage up to $250,000
• Contents coverage up to $100,000
• 30-day waiting period for new policies
• Deductibles separate from homeowners policy

Note: Mississippi experienced catastrophic flooding from Hurricane Katrina. Many homeowners discovered their policies did not cover flood damage, leading to increased awareness and purchase of flood insurance.

Replacement Cost vs. Actual Cash Value

Replacement Cost Coverage

Replacement Cost - Cost to repair or replace property with materials of like kind and quality, without deduction for depreciation.

Advantages:

• Full repair/replacement without depreciation
• Reflects current construction costs
• Better protection for homeowners

Requirements:

• Property must be repaired or replaced
• Repairs must be completed to receive full replacement cost
• Initially pays ACV, then pays depreciation upon completion

Actual Cash Value Coverage

Actual Cash Value (ACV) - Replacement cost minus depreciation.

Formula: $\text{ACV} = \text{Replacement Cost} - \text{Depreciation}$

Used For:

• Older homes (HO-8 policies)
• Personal property in HO-3 policies (unless endorsement added)
• Properties with maintenance issues

Example:

• 10-year-old roof damaged by hail
• Replacement cost: $15,000
• Depreciation (50%): $7,500
• ACV Payment: $8,500 (after $1,000 deductible)

Mississippi Property Insurance Claims

Post-Katrina Claims Reforms

After Hurricane Katrina, Mississippi enacted reforms to protect consumers:

Prompt Payment Requirements

Claims Handling Standards

Mississippi insurers must:

1. Investigate Promptly

   • Assign adjuster within reasonable time
   • Inspect property without unreasonable delay
   • Request only necessary documentation

2. Communicate Clearly

   • Explain coverage determinations
   • Provide reasons for denials in writing
   • Return policyholder calls and emails promptly

3. Fair Settlement

   • Offer fair settlement based on policy terms
   • Do not lowball or undervalue claims
   • Negotiate in good faith

4. No Unfair Practices

   • No unreasonable delay in settlement
   • No misrepresentation of policy provisions
   • No improper claim denial

Appraisal Process

If insured and insurer disagree on claim value:

Appraisal Clause:

1. Each party selects an appraiser
2. Appraisers select an umpire
3. Appraisers submit estimates to umpire
4. Umpire decides if appraisers disagree
5. Written agreement of any two is binding
6. Each party pays own appraiser; share umpire cost

Exam Tip: Mississippi requires insurers to acknowledge claims within 15 days and begin investigation within 30 days. Claims must generally be paid or denied within 90 days.