THE HONEST BROKER: NEW “CITIZENS” INSURANCE POLICY HOLDERS BEWARE
BY: DIANE LOTT, BROKER PARADISE FOUND REALTY, INC.
According to Citizens Insurance Corporation’s own website, Citizens Insurance Corporation has been a lifeline for homeowners that not only need coverage but affordable property insurance for decades. It is a source of coverage for those that cannot otherwise get their property covered and have been turned down for homeowners’ coverage.
On January 2021, working with the Florida Office of Insurance Regulation (OIR) Citizens brought their rates more in line with private market carriers while staying within the statutory guidelines for current policyholders. Since October 2019, Citizens has seen its policy count jump from 420,000 to more than 640,000 and is now seeing increases of more than 5,000 new policies per week. At that pace, company officials expect the policy count to exceed 750,000 by the end of 2021, a 20% increase. Higher than expected losses from Hurricanes Irma and Michael coupled with stubbornly high litigation and reinsurance costs have prompted many private insurers to raise rates, limit coverage and exit particular markets which has caused more policies coming to them.
With the increase of written policies, Citizens has found ways to decrease its exposure to excessive claims. The underwriting period is now up to 90 days. This means that you can “close” on a home with a “bound” policy by Citizens and find out any time within that first 90 days that you have been denied coverage and will be CANCELLED. This occurred to a client that had an inspection in which the report didn’t find anything that would have been considered a red flag for being “uninsurable” and proceeded to closing. However, the roof was over 15 years old and although it still had useful life, was designated as the reason for cancellation. The most unbelievable part of that is that the client was notified on Friday night by email after 5pm that their policy was being cancelled on Monday leaving them uninsured.
Roof age is important, and even though the inspection can reflect useful life remaining, it is no longer the standard according to the State of Florida’s Insurance commissioner’s’ office. The standard with most insurers along with Citizens, is now any roof over 15+ years can be used as grounds for inability to insure. Also, an extension for underwriting approval of up to 90 days is commonplace, especially for Citizens. Bottom line is to be aware that insurance cancellation after closing or non-renewing of a policy is becoming more commonplace.
Diane Lott, Broker
Owner: Paradise Found Realty
Paradise Found Realty, Inc. of Palm City
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