There was good news and bad news this week for Vineyard home insurance customers who already pay some of the highest premiums and deductibles in the nation.

A well-known Rhode Island insurance company announced Tuesday it will expand coverage to include long-neglected markets like Cape Cod and the Islands. But also this week came bad news; the state’s top court last Friday upheld a 25 per cent increase to the rates of Cape and Islands homeowners covered under the FAIR plan — the state-backed insurer of last resort and provider for most Vineyard homeowners.

The announcement by the Narragansett Bay Insurance Co. to offer insurance to those forced into the FAIR plan reverses the trend of insurance companies dropping customers along coastal areas of Massachusetts. A number of factors, including natural disasters like hurricanes and the threat of global warming, has prompted many insurance companies to stop underwriting polices altogether for many Island homeowners.

The trend hit a critical point in 2004 when the Andover Companies stopped covering the region. Over the next three years at least seven more insurers declined to renew some or all of their Cape policies, leaving more than 43,000 homeowners looking for new insurance coverage.

In recent years, nearly all Island residents have been forced into the FAIR plan as private insurance companies have stopped covering the area, citing the possibility of devastating hurricane losses. About 59,000 homeowners on Cape Cod and the Islands — or 44 percent of the market — are now enrolled in the FAIR Plan.

Stewart Steffy, the chief executive of the Narragansett Bay Co., told the Cape Cod Times that his company is expected to target mid-priced houses on the Cape and Islands. Those who qualify for policies could see their rates drop by 10 to 40 per cent below the average FAIR plan premiums, he said.

The news came as a relief to many, including John Golembeski, president of the Massachusetts and Rhode Island FAIR Plans. He told the Cape Cod Times that the plan was never meant to be a primary insurer.

The good news was dampened somewhat by the unanimous vote by the state Supreme Judicial Court to affirm the 2006 decision by former insurance commissioner Julianne Bowler to increase the rates of FAIR plan customers by 20 per cent along parts of the south coast and 25 per cent on the Cape and Islands.

The insurance hike was appealed by attorney general Martha Coakley who accused the FAIR plan of gouging homeowners while earning more than $100 million in profits over the past three years.

The high court decision clears the way for state insurance commissioner Nonnie Burnes to rule on a request for another 25 per cent FAIR plan rate hike for the Cape and Islands customers. A decision on that request from the Massachusetts Property Insurance Underwriting Association — the coalition of private insurers that manages the FAIR plan — is expected in late winter or early spring.

Meanwhile, Cape and Islands Sen. Robert O’Leary and Rep. Eric T. Turkington have joined the attorney general in filing a dissenting report in opposition to a final report from a special legislative commission created last year to review the homeowners insurance market and recommend changes.

Both Mr. O’Leary and Mr. Turkington helped form the special commission with an eye toward bringing reform to a home insurance industry in crisis. And while the lawmakers agreed with some of the ideas in the report — including the creation of a state catastrophe fund to offset costs in case of a large storm or natural disaster — they felt the final recommendations were too soft and failed to recommend any real solutions.

The report stops short of calling for a public review of computer storm models most believe are driving up the cost of insurance along the coast.

Instead the report simply calls for the creation of an independent panel to study the accuracy of the models.

“Instead of calling for change the report calls for more talking about making change. These homeowners don’t have time to talk anymore, they need relief,” Mr. O’Leary said.

Mr. Turkington agreed.

“There is a spotlight on this issue now, and I think it has become apparent that this is a broken system. One small section of the insurance industry, homeowners in coastal areas, are being forced to pay higher rates without any real evidence that they are at a higher risk then the rest [of the state],” he said.