Florida’s Citizens Suggest Steps to Reduce Its Exposure

Florida’s largest property insurer wants to roll back coverage on high-value homes and lower its coverage limits on homeowners’ liability, as part of a broader plan to reduce its exposure in the state.

Florida Governor Rick Scott last month ordered Citizens Property Insurance Corp. to find ways to reduce its financial exposure that could be implemented next year without legislative action.

In preparation for a report to be delivered to Scott next Tuesday, the insurer’s underwriting committee voted in favor of a slate of proposed changes that will leave some homeowners with less coverage, but likely only marginally reduce the insurer’s overall 1.5 million policyholder count.

Starting this month, the committee voted to cap coverage on high-value homes at $1 million or drop them, a move which could affect roughly 7,500 homeowners whose homes already exceed that limit. It also wants to raise its current sinkhole deductible on the remaining high-value homes at 10 percent.

The committee also voted to reduce the insurer’s homeowners coverage on property damage from its current level of $300,000 to $100,000 and lower its coverage limits for contents coverage.

Come March, the insurer wants to drop coverage on vacant homes and require homes that are 30 years old or older be inspected to show that the electrical, heating, and plumbing systems have been updated.

Also next year, homeowners who have filed for claims in the past could see an additional fee.

The committee also explored the option of dropping law and ordinance coverage on everything but the primary residence and phasing out hurricane-proofing discounts five years after an inspection.

Board members noted that the proposals may make Citizens coverage less attractive to consumers, but until the legislature moves to allow it to raises rates beyond its 10 percent annual cap, the insurers current financial position will remain unchanged.

“To be the insurer of last resort, the legislature has to line-up with that goal,” said Carlos Lacasa, board chair.

In November, the insurer told agents it will no longer provide coverage for most structures beyond the main residence. Excluded from the coverage will be screen porches, carports, pool enclosures, and patios that are not built out of the same material as the main residence.

Also on the list are tiki huts, gazebos or other similar buildings that are designed to be open to the weather. Any structures that have a roof or wall made of thatch, lattice or similar materials are likewise excluded.

The insurer is also placing a $10,000 cap on any cosmetic damage to floors that cover less than five percent of a home’s total square footage.

Those changes will go into effect on all new and renewal policies as of January 1.

Topics Florida Carriers Homeowners