Citizens customers face new hurdles as company attempts to shrink
In the next month, almost 400,000 people whose homes are covered by the state-run Citizens Property Insurance Corp. will get a letter in the mail from another insurance company taking over their homeowners’ insurance coverage by Nov. 5.
Policyholders will have two options:
Say no, and remain with Citizens, taking a chance that their options will become even more limited beginning in January, when a $44.9 million clearinghouse comes online to allow insurance agents in the private market to handpick Citizens policies.
Or say yes, accepting the coverage from the so-called “takeout” company, one of 10 smaller carriers. Unlike Citizens, those companies have the right to raise insurance premiums by unlimited amounts when the policies come up for renewal.
It’s all part of the aggressive and controversial push by Gov. Rick Scott and the Florida Legislature to shed Citizens Property Insurance of its 1.2 million state-subsidized policies. Under current law, if Citizens falls short of the cash it needs to pay its claims after a massive storm, policyholders of other lines of insurance and state taxpayers will be assessed fees to foot the bill.
But as Citizens shifts policies to the private market, the bottom line for homeowners is that costs will rise. Private companies don’t face the same rate caps as those imposed on Citizens, and they don’t benefit from the taxpayer-backed system. Story here.