Citizens Insurance Homeowners Limitations & Exclusions

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Citizens Insurance Homeowners Limitations & Exclusions

Citizens Property InsuranceWe often have clients (or prospective clients) calling us asking for a quote with Citizens for their home insurance policy because their neighbor or friend says their Citizens homeowners was cheaper. By law agents cannot offer a Citizens quote unless no standard carrier will accept you or if the standard insurance company is 15% more expensive than the Citizens premium – unless those agents do not have any alternative standard insurance company’s.

What is Citizens?

Citizens Property Insurance Corporation was created in 2002 by the Florida state government to provide property insurance for home-owners who could not obtain insurance elsewhere. It is a government owned and regulated not-for-profit, insurer of last resort. Due to lack of willing markets and rates that were below standard market rates – Citizens quickly went from being a market of last resort to the cheapest and largest insurer in the state.

While it may be true that Citizens has been cheaper,  the State of Florida under the guidance of Governor Scott is working to change that. In addition to increasing Citizens premiums there have also been changes that reduce coverage making that policy less and less effective at the time of a loss when compared to other carrier policy choices. In fact by choosing to go with a less costly Citizens policy you may be making one of the most expensive insurance purchasing decisions you have ever made.

Florida Policy holders have been spared an increase this year, but the State government has proposed a SB1770 where a “clearinghouse” will be set up to steer policy holders to the private sector. Homeowners with Citizens will be pushed through a a clearinghouse that will force them into the private market if they receive a comparable insurance rate to that of Citizens.

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This bill is yet another step toward returning Citizens to its rightful place as Florida’s insurer of last resort,” said Don Brown, regional manager for Property Casualty Insurers Association of America.

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The ISO Standard

For reference, the Insurance Services Office or “ISO” is the organization responsible for providing insurance coverage forms to many insurance company’s. In essence, their policy forms are used as a template to establish many ‘standard’ insurance companies policy’s. Below are some of the current gaps of coverage in a Citizens homeowners policy as compared to the standard ISO form. It’s important to note that most standard carriers actually provide improved (broader) coverages over the standard ISO form – if we  included those, the gap in coverages would prove to be even more dramatic.


Gaps In Coverage

Coverage Description

Citizens Policy

Standard ISO

Coverage D: Loss of Use

 

 

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  • Loss of Use
  • Length of Coverage[/list]

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  • 10% of Dwelling
  • 24 month Limit[/list]

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  • 20% of Dwelling
  • No Limit[/list]

Coverage B: Other Structures

 

 

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  • Other Structures
  • Contents of Other Structures[/list]

[list type=”delete”]

  • Not Covered
  • Not Covered[/list]

 

[list type=”check”]

  • Covered
  • Covered[/list]

 

Coverage C: Personal Property

 

 

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  • Food in Refrigerators & Freezers off premises
  • Theft off premises (warehouse, bank, etc.)[/list]

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  • $ 500
  • Not Covered[/list]

 

[list type=”check”]

  • No Limit
  • Covered[/list]

 

Coverage A: Dwelling

 

 

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  • Mold, Fungus, wet/dry rot, yeast or bacteria[/list]

[list type=”delete”]

  • $10,000[/list]

[list type=”check”]

  • No Limit[/list]

Coverage E: Personal Liability

 

 

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  • Animal Liability
  • Personal Liability Limit
  • Medical Payments (Coverage F)[/list]

 

[list type=”delete”]

  • No Coverage
  • $ 300,000
  • $ 2,000[/list]

 

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  • Covered
  • $ 500,000
  • $ 5,000[/list]

 

Section II:

 

 

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  • Lead Paint[/list]

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  • Not Covered[/list]

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  • Covered[/list]

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Coverages Not Available on Citizens policy

While not all inclusive, the list below details some of the common coverages and endorsements not available under a Citizens policy:

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  • Personal property limited to 50% of Coverage A (Dwelling) with no option to increase.
  • “Special” property coverage (HO-15 or HO-5) not available.
  • Water/sewer back coverage not available.
  • Increased loss assessment above $3,000 not available.
  • Scheduled property (floaters) coverage not available.
  • Increased special limits of personal property (jewelry, furs, etc.) not available.
  • Watercraft liability endorsement not available.
  • Inability to schedule other structures off premises.
  • Liability coverage cannot be extended to other locations (rental property or vacation home)
  • Business liability not available.
  • Personal injury liability not available.
[/list]
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Coverage A: Property Not Covered

There have been many changes to the Citizens coverages over the past year and a half that have gutted the protection. Below is a summary by effective date that Citizens has implemented.

Changes Effective 1/1/12

The following property is not covered under the Citizens policy and there is no buy-back option:

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  • Any structure enclosed by screens on more than one side, constructed to be open to the weather, and not constructed of and covered by the same or substantially the same materials as that of the primary dwelling.
  • Carports, open sided porches that have a roof covering, and patios that have a roof covering, not constructed of and covered by the same or substantially the same materials as that of the primary dwelling.
  • Any structure or attachment where that structure’s roof coverings or exterior wall coverings are of thatch, lattice, slats, or similar material.
  • Slat houses, chickees, tiki huts, gazebos, cabanas, canopies, pergolas, or similar structures, constructed to be open to the weather.
  • Awnings, aluminum carports, and aluminum framed screened enclosures.
[/list]
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Coverage B: Property Not Covered

The following property is not covered under the Citizens policy and there is no buy-back option:

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  • Any structure enclosed by screens on more than one side, constructed to be open to the weather, and not constructed of and covered by the same or substantially the same materials as that of the primary dwelling.
  • Carports, open sided porches that have a roof covering, and patios that have a roof covering, not constructed of and covered by the same or substantially the same materials as that of the primary dwelling.
  • Any structure or attachment where that structure’s roof coverings or exterior wall coverings are of thatch, lattice, slats, or similar material.
  • Slat houses, chickees or tiki huts, gazebos, cabanas, canopies, pergolas, or similar structures, constructed to be open to the weather.
  • Awnings, aluminum carports, and aluminum framed screened enclosures.
[/list]
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More Coverage Reductions

The Office of Insurance Regulation approved a lengthy list of coverage reductions under all Citizens’ policies, including personal lines and commercial lines. Those reductions for new and renewal policies were phased in March through June 2012. Those pertaining to the homeowners policy are below.

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  • Reduce default Coverage B from ten % to two %. (Option to buy back up to ten %.)
  • Eliminate option to schedule individual Coverage B items.
  • Eliminate option to buy back coverage for other structures rented to others.
  • Eliminate option to buy back coverage for other structures used for business purposes.
  • Reduce default Coverage C from 50 % of Coverage A to 25 %. (Option to buy back to 50 %.)
  • Eliminate increased loss assessment coverage. Provide only $1,000 in the HO-3 and HO-4, and the statutorily mandated $2,000 in the HO-6.
  • Implement mandatory ten % sinkhole deductible.
  • Reduce personal liability coverage from $300,000 to $100,000. (Medical Payments to Others Coverage remains at 2,000).
  • Expand sinkhole inspection program to an additional 12 counties.
  • Eliminate increased mold limit options of $25,000 and $50,000.
[/list]
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Assessments

Of course all of the property changes or reductions don’t take into account the possible assessments a Citizens policy holder could be charged with. If Citizens funds are depleted after a catastrophic event, resulting in a deficit, assessments are levied according to Florida law. This ability to levy assessments provides Citizens with resources to pay claims after an event.

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Policyholder Surcharges

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  • Citizens policyholders are the first to be assessed if a deficit occurs.
  • The policyholder surcharge is levied only on Citizens policyholders and is a one-time surcharge.
  • This assessment can be up to 15 % of premium for each of Citizens’ 3 accounts. The assessment is levied for any account that has a deficit. That means that Citizens policyholders could be assessed a maximum of 45 % of the policyholder’s premium if there is a deficit in all 3 of Citizens accounts.
  • If the Citizens Policyholder Surcharge does not cure a deficit, additional assessments will be levied based on the account type:
  • Coastal Account – Regular Assessment
  • Commercial Lines Account (CLA) or Personal Lines Account (PLA) – Emergency Assessment
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It’s not hard to understand that through rate increases, severe reductions in coverage and the potential for assessment – Citizens is telling policy holders in no uncertain terms – they don’t want your business. When shopping your insurance – the most important thing you can do is ask your agent if they have alternatives to Citizens. You may be surprised to find out that some Florida agents have no homeowners markets but Citizens! Talk to an independent agent that is authorized and appointed with a number of private insurance companies that can provide you the broadest coverage at a price that’s reasonable, after all if you have a Citizens policy – you may find you got what you paid for.

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By | 2017-04-13T11:38:18+00:00 8:30 am|Categories: blog, Personal|Tags: , , |0 Comments
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