In a disquieting move, Florida’s state-run insurance company, Citizens, is poised to drop thousands of homeowners’ policies. Initiated as an insurer of last resort in 2002 due to frequent hurricanes causing extensive property damage, the firm now predicts it will have to continually reduce its coverage in the wake of potential insolvency if a significant hurricane strikes. As a workaround, a new law permits insurance companies to charge up to 20% more than Citizens’ rates, though homeowners might find some solace in being able to obtain a private policy that doesn’t necessitate expensive flood insurance.
The retreat of multiple insurance carriers from Florida after the destructive hurricanes of 2004 and 2005 has compounded the issue. Additional complications arise from the soaring cost of payouts to construction companies, not dissimilar to the issues California faces with its wildfires. The two coastal states, with their unique environmental hazards, are being backed into a corner where homeowners are required to shoulder additional expenses such as flood or earthquake insurance, both of which come with hefty premiums.
Insurance Commissioner Michael Jaworski views the move to depopulate Citizens as a good sign, suggesting a healthy market when private carriers step in. However, there’s uncertainty about the impending costs to policyholders. Home insurance premiums in Florida are expected to leap to about $4,000, significantly higher than the average US policy cost of roughly $2,200. Regardless of the spin, policyholders are advised to brace for changes and monitor their mailboxes for warnings of these inevitable shifts.
#FloridaInsurance #HomeownersPolicies #CitizensInsurance
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