Within the past few months, you may have been one of 300,000 Florida homeowners that received a letter from your current home insurance carrier, State-backed Citizens Insurance.
As you may be aware, Citizens was created in 2002 to help insure homes in the Sunshine State that were not eligible for any other private insurance option. It is known as the "insurer of last resort". There are number of reasons a home may have been ineligible for private carrier coverage at the time it was purchased… not the least of which is simply that there were (and still are) many carriers that weren't financially prepared to handle the ever-increasing claims resulting from unanticipated storms here. Some private insurers went bankrupt due to overwhelming claims, while others chose to leave the state completely to remain solvent
The good news is that today, new insurance companies understand and accept the inherent risks that come with insuring a Florida home and are willing to take on those risks in order to do business here. The increase of these private insurance options is resulting in some current Citizens customers now having new choices in coverage,
Citizens has been overwhelmed by the number of policies it has had to take on during the private company exodus from Florida, and now is looking for ways to shed homeowners that have new options in the state (this is known as their "depopulation" strategy). As a result, they have determined that (1) if they are able to find you a private insurer that is within 20% of your current Citizens rate, you must switch to that private insurer and (2) if Citizens cannot find you a cost-effective private insurer (within 20% of your current rate), you can choose to stay with Citizens.
Why would someone choose to go with a policy that is more than 20% higher than their current Citizens rate? There are a few reasons:
- Citizens has a maximum personal liability coverage of $100,000, but many scenarios require more coverage in this area. Private carriers offer broader options, like $300,000 and $500,000 coverage, which may be available for a very small annual increase in rate.
- Those who currently carry Umbrella Insurance (which requires at least $300K in Personal Liability Coverage) and go with Citizens for their Homeowners Insurance will need an Excess Liability Policy to cover the difference between the maximum Citizens offers and what is required by the Umbrella. Excess Liability Insurance costs substantially more than going with a Private Market Homeowners Insurance company and increasing the Liability Coverage through that Homeowners Insurance Policy.
- Citizens doesn't cover water back-ups or screen enclosures and many private insurers do.
- When it comes time to make a claim, your experience with Citizens may be similar to what you might expect from any government office - longer wait times, multiple levels of red tape to get a claim processed and perhaps less chance for a "personal touch" in your interactions with them. While this isn't always the case, and many who work with Citizens do a wonderful job, it's worth noting that the experience may be inconsistent.
So what to do? Well, if you currently have Citizens insurance and have received a letter or notification of new private options, feel free to pick up the phone and call us to discuss which options make the most sense for your personal situation. We're always here to help! But make that call soon - or a decision may be made for you!
Michele Wood is a Personal Lines Account Manager at Wren.