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Citizens Insurance Continues Depopulation Efforts

Homeowners Insurance Policy Form

Citizens Property Insurance Corp., the state-backed Florida insurer, is continuing its efforts to move policies to private insurance companies. The primary goal of this depopulation is to reduce Citizens' exposure to risk, as it was never intended to carry the number of policies it currently holds. The depopulation process involves approval from the Florida Office of Insurance Regulation, and some policyholders for the time being, have the option to opt out or remain with Citizens.


Florida's Insurer of Last Resort

Citizens is often referred to as the insurer of last resort and was meant to only issue policies to certain qualified homeowners who otherwise would not be able to insure their properties for a variety of reasons. However, as the homeowners insurance crisis in Florida has become more serious over the past years, Citizens Insurance has realistically become the only insurer for many Floridians. 

Some of the main reasons for this surge in homeowners seeking coverage with Citizens is that many private insurance companies: 

  • have stopped issuing policies in the State of Florida altogether
  • have become unreasonably restrictive in their qualification criteria
  • are quoting premiums that are unrealistic for most Floridians to pay

This applies to both new and existing customers renewing their policy with a private insurer, even if they have never had a claim.


Private-Market Insurance Offers

Citizens’ Property Insurance Clearinghouse determines whether private-market coverage is available for a given policy. Homeowners whose property is deemed to be eligible to be insured by a private company are sent a letter from the Depopulation Unit, informing them that they have “received an offer of property insurance coverage from one or more private-market insurance companies”. The letter includes a list of private insurers who may be willing to take over the policy, as well as the Estimated Premiums offered. Citizens policy holders are also given a date by which they must respond to register their choice.

Citizens Insurance is currently sending two types of letters to its residential customers:

  • Policyholder Choice Offer Letter & Form (Eligible to Remain with Citizens)
  • Policyholder Depopulation Offer Letter & Form (Not Eligible to Remain with Citizens)


Policyholder Choice Offer Letter

The Policyholder Choice Offer Letter this time around states that “The Choice Is Yours” and policy holders are not forced to accept the private insurance company’s offer, it also notes in the letter that “Future offers received with a premium no more than 20% greater than Citizens’ premium will render your policy ineligible to renew with Citizens”. This means that come next renewal, some homeowners might not have a choice but to move their policy to a private insurance company, depending on the premium quoted for comparable coverage. But for this coverage period, policyholders can opt to stay with Citizens or accept a private market offer.


Policyholder Depopulation Offer Letter

The Policyholder Depopulation Offer Letter on the other hand is a notification that the policy with Citizens is not eligible for renewal, since least one of the private market offers has an estimated renewal premium that is not more than 20% greater than the estimated Citizens’ renewal premium for comparable coverage. Homeowners will need to select one of the provided choices or shop for a quote on their own. If the Depopulation Letter only provides one choice, the letter states that “no action is needed. Coverage with your new insurance company will begin on” the assumption date, which is usually (but not always) the renewal date. If the letter lists multiple offers, it states that “Citizens will select an offer on your behalf if you do not register your choice by” the required response date.


Policyholders Need to Pay Attention to Details

Homeowners should be aware that both letter variants include estimates from private companies “based on current approved rates and policy information” and that “The estimated premiums are subject to change”. This means that the actual premiums may be slightly higher or lower (very unlikely though), than what is quoted in the letter from Citizens. Details regarding coverage and exclusions should also be compared diligently. Policyholders are encouraged to consult with their insurance broker for any questions that arise or advise regarding coverage options. Homeowners need to pay attention and carefully read any notices sent by Citizens Insurance and reply by the due date specified in the letter (if a response is required), since failure to do so might jeopardize their coverage.

Published by: Lester Alfonso - 4 October, 2023
McGregor Palms Realty
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