We often have clients (or prospective clients) calling us asking for a quote with Citizens for their home insurance policy because their neighbor or friend says their Citizens homeowners was cheaper. By law agents cannot offer a Citizens quote unless no standard carrier will accept you or if the standard insurance company is 15% more expensive than the Citizens premium – unless those agents do not have any alternative standard insurance company’s.
Citizens Property Insurance Corporation was created in 2002 by the Florida state government to provide property insurance for home-owners who could not obtain insurance elsewhere. It is a government owned and regulated not-for-profit, insurer of last resort. Due to lack of willing markets and rates that were below standard market rates – Citizens quickly went from being a market of last resort to the cheapest and largest insurer in the state.
While it may be true that Citizens has been cheaper, the State of Florida under the guidance of Governor Scott is working to change that. In addition to increasing Citizens premiums there have also been changes that reduce coverage making that policy less and less effective at the time of a loss when compared to other carrier policy choices. In fact by choosing to go with a less costly Citizens policy you may be making one of the most expensive insurance purchasing decisions you have ever made.
Florida Policy holders have been spared an increase this year, but the State government has proposed a SB1770 where a “clearinghouse” will be set up to steer policy holders to the private sector. Homeowners with Citizens will be pushed through a a clearinghouse that will force them into the private market if they receive a comparable insurance rate to that of Citizens.
This bill is yet another step toward returning Citizens to its rightful place as Florida’s insurer of last resort,” said Don Brown, regional manager for Property Casualty Insurers Association of America.
For reference, the Insurance Services Office or “ISO” is the organization responsible for providing insurance coverage forms to many insurance company’s. In essence, their policy forms are used as a template to establish many ‘standard’ insurance companies policy’s. Below are some of the current gaps of coverage in a Citizens homeowners policy as compared to the standard ISO form. It’s important to note that most standard carriers actually provide improved (broader) coverages over the standard ISO form – if we included those, the gap in coverages would prove to be even more dramatic.
Coverage Description
Citizens Policy
Standard ISO
Coverage D: Loss of Use
Coverage B: Other Structures
Coverage C: Personal Property
Coverage A: Dwelling
Coverage E: Personal Liability
Animal Liability
Section II:
While not all inclusive, the list below details some of the common coverages and endorsements not available under a Citizens policy:
There have been many changes to the Citizens coverages over the past year and a half that have gutted the protection. Below is a summary by effective date that Citizens has implemented.
Changes Effective 1/1/12
The following property is not covered under the Citizens policy and there is no buy-back option:
The following property is not covered under the Citizens policy and there is no buy-back option:
The Office of Insurance Regulation approved a lengthy list of coverage reductions under all Citizens’ policies, including personal lines and commercial lines. Those reductions for new and renewal policies were phased in March through June 2012. Those pertaining to the homeowners policy are below.
Of course all of the property changes or reductions don’t take into account the possible assessments a Citizens policy holder could be charged with. If Citizens funds are depleted after a catastrophic event, resulting in a deficit, assessments are levied according to Florida law. This ability to levy assessments provides Citizens with resources to pay claims after an event.
Policyholder Surcharges
It’s not hard to understand that through rate increases, severe reductions in coverage and the potential for assessment – Citizens is telling policy holders in no uncertain terms – they don’t want your business. When shopping your insurance – the most important thing you can do is ask your agent if they have alternatives to Citizens. You may be surprised to find out that some Florida agents have no homeowners markets but Citizens! Talk to an independent agent that is authorized and appointed with a number of private insurance companies that can provide you the broadest coverage at a price that’s reasonable, after all if you have a Citizens policy – you may find you got what you paid for.
