Will Citizens Property Insurance Be Able to Pay Claims if a Hurricane Strikes South Florida?
Tuesday, August 05, 2008
Citizens Property Insurance Corporation plans to redo windstorm policies statewide, in an effort to make sure customers pay premiums that cover the full replacement value of their homes. This process will start early next year when policies renew and policyholders will give six months notice starting this week.
Citizens will drop approximately 350,000 policyholders who have coverage only for windstorms and have them reapply for policies. Almost all will be approved for new policies but premiums will be adjusted to allow Citizens to ensure policies are covering the full replacement value of homes. These values may have increased in the past few years as construction costs have jumped and as homeowners made additions to their homes. The Legislature has frozen the state-backed insurer’s premiums until 2010.
About half of Citizens customers affected are in South Florida. Some policyholders with roofs older than 50 years or shingle roofs older than 25 years, which are considered most prone to damage, may not qualify for wind-only coverage. The change signals a shift in the perception of Citizens as an insurer of last resort to more like a private insurer, industry analysts said.
Citizens will drop approximately 350,000 policyholders who have coverage only for windstorms and have them reapply for policies. Almost all will be approved for new policies but premiums will be adjusted to allow Citizens to ensure policies are covering the full replacement value of homes. These values may have increased in the past few years as construction costs have jumped and as homeowners made additions to their homes. The Legislature has frozen the state-backed insurer’s premiums until 2010.
About half of Citizens customers affected are in South Florida. Some policyholders with roofs older than 50 years or shingle roofs older than 25 years, which are considered most prone to damage, may not qualify for wind-only coverage. The change signals a shift in the perception of Citizens as an insurer of last resort to more like a private insurer, industry analysts said.
Premium quotes will be available two months before renewals next year, but policyholders with old roofs are encouraged to contact their agents immediately.
