Florida Homeowners Faced with Tough Choices as Citizens Jettisons Customers

J.P. Gonzalez-Sirgo
Founder of J.P. Gonzalez-Sirgo, P.A.

During the next several weeks, close to 400,000 Florida homeowners will receive a letter from Citizens Property Insurance Corporation informing them that the insurance company sending the letter will be taking over the policyholder’s coverage.  Homeowners who receive this letter will be given two options, and both have potential drawbacks for policyholders. 

  • Option 1: Homeowners can decline to switch to the new insurance company and remain with Citizens.
  • Option 2: Policyholders can elect to accept coverage from the new carrier (referred to as the “takeout company”).

Policyholders are faced with a dilemma because both of these options have disadvantages.  Those who choose the first option might face even more limited alternatives commencing in January.  At that time, a clearinghouse will launch to permit private homeowner carriers to select Citizen policies.  This option may expose current Citizens policyholders to even more limited options than they currently face.

Option 2 also presents a significant drawback because the ten smaller insurance companies that comprise the takeout companies are not restricted in terms of their ability to increase premiums when time rolls around for renewal subject to an exception during the first three years discussed below.

Florida homeowners insured by Citizens face this difficult choice because the Florida legislature and Gov. Scott have undertaken to cast-off the state subsidized coverage of 1.2 million policyholders.  The motivation for this change is based on current Florida law.  The provision requires policyholders with other lines of insurance and Florida taxpayers to be assessed fees to cover the shortfall if Citizens has insufficient cash to satisfy claims after a severe storm.  Citizens’ policyholders will face rising costs as they are shifted to private insurance carriers because their rate increases are not capped, and taxpayers do not subsidize private homeowner insurance companies.

Under new legislation passed last year, individuals insured by Citizens will not be allowed to renew if a private insurance company offers a comparable policy at a rate that is equal or less than the amount of the premium renewal with Citizens.  Starting on January 1, 2015, new applicants for Citizens will be forced to accept coverage from a private insurance if the premium is within 15 percent of the rate offered by Citizens.  At that time, existing Citizens policyholders may be offered less coverage, but the rate cannot exceed the insured’s current policy.

While this news is mostly negative for Florida homeowners who are currently covered by Citizens, there is one bit of good news.  If an insured is compelled to switch to the private carrier through the clearinghouse, the homeowner will benefit from a 10 percent cap on premium increases for three years.

You can reach Miami Insurance Claims Lawyer J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Attorney Gonzalez-Sirgo directly at [email protected].

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