It is unlawful in the State of Minnesota to insure a property for more than the Replacement Cost of the structure(s).  The replacement cost of a structure does not include the value of the land.  Property insurance contracts do not provide coverage for the value of the land, whether the land value is collateral for the mortgage loan or not.

Unlike private insurance companies, the FAIR Plan does not provide Replacement Cost Coverage.  All policies issued by the FAIR Plan are for the Actual Cash Value of the structures, which never includes the value of the land.  Actual Cash Value is described as the Replacement Cost of a structure, less Depreciation.  Regardless of the amount of a mortgage loan, the FAIR Plan will not insure a structure for more than the Actual Cash Value of that structure.

The FAIR Plan accepts requests for increases in coverage only if they are made by a party to the contract, such as an insured or their agent.  We will not change coverage at the request of a Mortgage Company or Mortgage Broker, please do not ask us to do so. 

Minnesota law protects a Mortgage Company's interest as long as the insurer has been informed of that interest.  If you have informed us in writing of your interest in a property, your interest is protected as of the date of notification or the date your interest begins (whichever is later), regardless of whether we have been able to provide a new declaration page showing the new interest.  Please consider this before requiring that your customer present a declaration page at closing showing the new mortgage interest.