Florida Citizens Property Insurance Corp. is going back to offering some coverage it pulled back on as part of a massive property insurance bill in 2011, and other recent steps meant to reduce exposure.
SB 408—and the other state-government-supported measures to cut down on Citizens’ overburdened book of business—resulted in several “unintended consequences,” says Citizens spokesman Michael Peltier. Therefore, the last-resort insurer must step into its role to provide insurance for those with no place left to turn.
Citizens’ Board of Governors has approved the changes, which would open the insurer’s doors to some risks related to sinkholes, new-home construction, and mobile homes.
Peltier says there were “gaps in coverage in the private market” for these risks. No insurance was available in some cases. He says Citizens will be charging appropriate premiums to reflect these risks.
The slate of coverage adjustments still needs the approval of the Florida Office of Insurance Regulation.
If approved, homeowners with prior sinkhole claims who have made all sinkhole-related repairs as recommended by an engineer will be eligible for a Citizens policy, with or without sinkhole coverage—whether the prior loss was partial or total.
Homeowners can still get a Citizens policy if sinkhole repairs were made that differ from an engineer’s recommendations, but not for sinkhole-related risks.
Citizens had been cutting off homes that had exceeded or met policy limits due to sinkhole activity.
Sinkhole reform was a major component of SB 408, which defined structural damage from a sinkhole.
A year ago Citizens has additionally cut down on writing some other coverage, such as builders’ risk, and carports or other similar structures for mobile homes. These actions were taken as Citizens constantly looks for ways to reduce exposure. The insurer has become the largest property insurance writer in the state—a title it was never meant to occupy.
However, feedback from the market made it clear new-home construction risks could not be insured in the private market in some regions, such as Monroe County. And by cutting out carports or screed enclosures for mobile homes, these homeowners could not comply with requirements within their communities.
Citizens approved a “targeted” reinstatement of builders’ risk not to exceed $1 million for wind-only coverage on single-family home in coastal territories.
The insurer will also allow mobile homeowners to buy coverage for carports and screen-in structures, with a limit of $10,000.