TALLAHASSEE — With the cost of insurance soaring, many senior citizens in Florida are choosing the precarious option of dropping insurance altogether and bearing the risk of a hurricane hit on their own.
Senior citizens are more likely to own their homes outright, meaning they have the option of going without property insurance. As Citizens Property Insurance Corp. raises its rates and its post-claim deductibles, more elderly Floridians are doing the math and opting to do just that.
Consider Al Jacobs, a Miami Beach retiree who was forced to buy insurance with Citizens after all other insurers declined to cover his waterfront home.
Jacobs, 70, pays about $5,000 for windstorm insurance and $2,000 for flood insurance each year. On top of that, his deductible for windstorm coverage is $12,000, meaning if a storm hit he'd have to spend nearly $20,000 in a single year before his insurance kicked in to pay for damage.
Jacobs, who saw his insurance premiums double this year, said it may be time to get rid of insurance and go "naked."
"The irony of it is the land is worth more than the house," he said. "If the whole thing blew away … "
His voice trailed off in thought as he weighed the macabre scenario of repairing a hurricane-damaged home without any insurance.
But, for Jacobs, the current reality — rising premiums and soaring deductibles — has become more poignant than the hypothetical nightmare.
"For next year I'm very seriously considering not having the insurance," he said, before pausing again to consider the risk. "Do I take the gamble? I don't know."
It's an inner battle weighing on the minds and pocketbooks of several seniors as they compare the rising cost of insurance — along with medication, gas prices and taxes — against their fixed incomes.
Meredith Donly, a real estate agent who owns rental property in a working-class neighborhood in Hollywood, decided to drop Citizens coverage this year after receiving a bill that increased her premium and doubled her deductible to $16,800.
"These are not protected in any way," she said, reaching out to touch one of the windows at the one-story, eight-unit rental building she owns. "I was so incensed with that new deductible, that it was an easy decision."
She fears what might happen if a hurricane were to strike, but said the increased deductible and premium would force her to pay more than $20,000 before her Citizens coverage kicked in for any repairs. "Let's say a tree over there falls on the roof and every window blows out," she said. "I still wouldn't hit $16,000."
On paper, cases like Donly's are celebrated as success at Citizens, which is furiously trying to reduce its size and shed policies. When customers leave state-run insurance — even if they end up in an uninsured no-man's land — Citizens counts itself one step closer to its ideal size. The state-run insurer of 1.4 million policies would like to drop as many as 700,000 customers in the coming years.
Senior citizens covered by the state-run insurer also have to deal with limited fixed incomes, rising health care costs and stiffer insurance requirements targeting older homes.
Carlos Lacasa, board chairman of Citizens, said the company cannot legally favor senior citizens as it implements policy.
"We're really constrained from taking into consideration those demographic issues," he said in an interview. "As humane as it might be to look at those things, we're simply unable to do that."
Property owners like Donly said there is no realistic alternative for coverage in the private sector. The rental rates at her modest one- and two-bedroom units have been frozen by the recession, even as her expenses have increased under Citizens.
"My rents are lower now than they were six years ago," she said. "I can't raise rent because of the economy. I'm bringing in less, but then I get much bigger bills, so we're making less."
Kirsten Llamas of Pinecrest said she received a $2,000 premium hike from Citizens just as her household budget was beginning to tighten. The recession forced her adult children to move back in with her and her husband, causing her expenses to increase significantly, and her 42-year-old home needs several repairs. She said she would drop her insurance, but can't because she needs to take out a new mortgage on the home she owns outright.
"I am on Medicare so we are squeaking by, but (we) feel we (will) have to take a mortgage out on our house to pay for our impending expenses," she said. "Should we die, our kids could not afford to take over our house and we can't afford to sell it and move into a house at new house rates and taxes."
Sen. Mike Fasano, a New Port Richey Republican who has spoken out against insurance rate hikes, said seniors call his office every week seeking relief from rising premiums at Citizens.
"Those on Social Security and our senior citizens, I don't think they've seen a cost-of-living increase in four or five years," he said. "They're barely holding on, and we have those in Tallahassee that think that by raising premiums on homeowners that's going to solve the problem. It's not."
This article includes comments from members of HeraldSource, part of the Public Insight Network. Toluse Olorunnipa can be reached at [email protected] and on Twitter @ToluseO.