* WARNING: THIS IS AN UNOFFICIAL, INTRODUCTORY COPY OF THE BILL.
THE OFFICIAL COPY CONSIDERED BY THE CITY COUNCIL IS THE FIRST READER COPY.
INTRODUCTORY*
CITY OF BALTIMORE
COUNCIL BILL R
(Resolution)
Introduced by: Councilmember Henry
A RESOLUTION ENTITLED
A COUNCIL RESOLUTION concerning
title
Request for State Action - State Run Home Insurer of Last Resort
FOR the purpose of calling on the State to establish a home insurer of last resort modeled on the State run auto insurer of last resort, MAIF, that could provide needed home insurance to homeowners denied coverage by the private insurance market due to factors beyond their control, such as nearby vacant properties.
body
Recitals
Homeowners’ insurance is a necessity for most property owning Baltimoreans, either as a requirement of their mortgages or due to simple prudence in protecting their single largest investment. However, the number of homeowners who are unable to obtain insurance, not because of their own actions but because of the negligence of their neighbors, has begun growing to troubling proportions.
Although Baltimore is hardly unique in experiencing this problem, the nature of our housing stock makes it especially acute here. Baltimore’s signature rowhouses are particularly vulnerable to damage from poorly maintained neighboring buildings with whom they share a wall. If the building on the other side of your wall happens to be vacant, the risk you face of problems spilling over onto your property due to poor maintenance of your vacant neighbor goes up dramatically.
The unfortunate reality that Baltimore has far too many vacant rowhouses means that these risks are faced by far too many homeowners, and their insurers. In some instances, the risk posed by a decaying neighbor rises to the point that no insurer is willing to take it on; and innocent homeowners can find themselves unable to obtain the insurance they need.
Without insurance these homeowners face huge financial risks, are unable to comply with the terms for financing, and could be forced to abandon their own homes. This situation is intolerable not only for the harm it does to blameless homeowners, but also for the devastating chain reaction it can cause in vulnerable neighborhoods whereby a single decrepit vacant home can metastasize and make an entire block uninhabitable.
Clearly, action needs to be taken to address this serious problem. Luckily, here in Maryland there is a well established precedent for handling the inability of private insurance to meet our residents’ needs.
In 1972 the General Assembly created the Maryland Auto Insurance Fund (MAIF) to solve a similar problem caused by the inability of same Marylanders to find auto insurance companies willing to provide the insurance coverage they were legally required to have. MAIF was created as a government entity tasked with directly supplying auto insurance to Maryland drivers rejected by the private market.
More than four decades later, MAIF continues to be a successful government program that, without the use of any taxpayer money, allows thousands of Maryland drivers to operate their vehicles in compliance with the law when they would otherwise be effectively barred from driving due to a market failure beyond their control.
Just as private insurance companies shouldn’t have the power to determine who can legally drive in Maryland, they shouldn’t be permitted to determine who can and cannot continue to live in their own homes. Instead, the State can, and should, create an entity to be the home insurer of last resort, just as MAIF is the auto insurer of last resort.
The MAIF model can easily be adapted to correct failures in the homeowners’ insurance market that threaten to drive blameless homeowners out of their homes. Maryland should begin to make these adaptations as soon as possible, before insurance companies’ unwillingness to risk their profits does any more irreversible harm to our most vulnerable neighborhoods.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF BALTIMORE, That the Council calls on the State to establish a home insurer of last resort modeled on the State run auto insurer of last resort, MAIF, that could provide needed home insurance to homeowners denied coverage by the private insurance market due to factors beyond their control, such as nearby vacant properties.
AND BE IT FURTHER RESOLVED, That a copy of this Resolution be sent to the Governor, the Honorable Chairs and Members of the Baltimore City House and Senate Delegations to the Maryland General Assembly, the President of the Maryland Senate, the Maryland House Speaker, the Mayor, and the Mayor’s Legislative Liaison to the City Council.
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