Citizens dropping accessory coverageBy Steve Estes
Citizens Insurance policy holders are about to lose more coverage from the only insurer that will write policies in the Florida Keys.
Citizens, the state-run insurer of last resort, recently announced that it will be deleting some coverages for ancillary structures.
In a letter sent to some policy holders last week, Citizens announced it will automatically delete coverage for certain structures, even if those structures are attached to the insured home.
“Your Citizens policy will no longer provide coverage for the following types of property, whether attached to the dwelling or not,” states the letter.
Those structures include: certain carports, screened enclosures, patios and awnings; all slat houses, chickees, tiki huts, gazebos, cabanas, canopies, pergolas or similar structures constructed to be open to the weather.
“If your property includes any of these items, they will not be covered by your policy if you renew with Citizens,” stated the letter.
If the additional structures are listed on your declarations page, they will automatically be deleted on renewal.
“This is just the next in many changes to come in a push to cover virtually nothing,” said County Commissioner Heather Carruthers.
In the last two years, Citizens has demanded that homes with roofs over 25 years old be recertified or dropped from the company’s rolls. Homes with hurricane shutters have in many cases had to be re-evaluated and re-scored to see if they could keep the discounts formerly offered. Roof attachment brackets have been re-inspected before those discounts would remain in force.
She said Citizens is currently in an all-out push to depopulate the company of windstorm policies.
After Hurricane Andrew swept across South Florida with damages in the multi-billions of dollars, private insurance companies began folding their tents and leaving the state in droves. Following the severe hurricane seasons of 2004 and 2005, the last of the private insurers pulled out leaving Citizens as the only insurer for Florida properties.
Implemented by the state Legislature to be an insurer of last resort when no private insurance was available, Citizens has instead become the largest windstorm insurer in the state with millions of policies.
And Gov. Rick Scott has been trying since he took office last year to find ways to divest the state of its insurance risks through Citizens. His current proposal is to sell the company to a private firm, even though all the private insurers left the state years ago.
“Even if Citizens didn’t cover smaller items like awnings and porches, home owners could at least get some traction against the deductible,” said Carruthers. “Now they won’t even get that.”
The standard deductible for homes in the Florida Keys is two percent of the coverage limits of the policy. Under that scenario, a home with $200,000 in coverage had to first meet a $5,000 deductible before insurance would pay any claims.
Most mortgage lenders require windstorm insurance as a prerequisite for the loans.
“We have to have it in most cases, but it’s getting to the point where nothing is covered,” said Carruthers.
Citizens also recently announced plans to ask the state Legislature if it could drop coverage on commercial buildings.
And all the while, the state Legislature has been approving a series of rate increases, up to 15 percent last year, with the same amount tacked on yearly unless the Legislature changes its mind.
Carruthers, one of the founding members of Fair Insurance Rates for Monroe, a grassroots organization that has fought outlandish Citizens rate hikes for the Keys for more than six years, said the group will be presenting alternatives to the state in the ner future.
“We want the Legislature to mandate that any private insurer that comes back to Florida to sell windstorm insurance offers it everywhere in the state, not just cherry-picked sections,” said Carruthers.
“We would also like to see the state merge Citizens cash reserves of $6 to $7 billion with the catastrophic reinsurance fund of $9 billion and put that out there as a reinsurance pool for private insurers to entice them to keep rates affordable,” said Carruthers.
Of course, FIRM is also still urging the Legislature to change the risk models so that they account for the higher building standards in Monroe County and to use a model that differentiates between wind and flood damage.
“We get very little wind damage because of our building codes,” said Carruthers. “Most of our damage comes from water, which Citizens doesn’t cover anyway, and which most flood insurance companies don’t cover either.”
The letter from Citizens urges policy holders to contact their local agent for further explanations on the recent round of coverage cuts.
Those coverage cuts will not be followed by rate cuts. Rates will continue to rise at the legislated maximum.