Citizens Insurance change could hike costs

Oct 16, 2008

A Citizens windstorm policy change is confusing for homeowners. Agents are left to explain the process and reasons for the change, which could result in price hikes for some clients.


Miami Herald-
-October 16, 2008

An administrative change is forcing homeowners with windstorm policies from Florida’s state-run insurer to reapply for coverage starting in February, but the switch is causing confusion for many and could raise costs for some.

Citizens Property Insurance is now sending notices to approximately 350,000 of its windstorm-only policyholders throughout the state about the upcoming change. This first notice, explaining the changes, is going out about six months before their renewal dates. Homeowners whose policies renew in February and March should have gotten their first communication from Citizens. A second should arrive four months before renewal.

A reminder sent 60 days before renewal will tell homeowners it’s time to contact their agents to have their new policies written.

There’s also good information about the mechanics of the switch on Citizens’ website at Still, agents say the notices are confusing to many homeowners and even mortgage banks.

”It’s a nightmare. We’re taking calls and trying to calm [clients] down, telling them we can take care of it,” says Jeff Weiner, president and CEO of MDW Ampac Insurance in Coral Gables.

While the change is taking place for administrative reasons — to accommodate a new computerized system for underwriting and administering policies — Citizens also has fine-tuned its windstorm policy. The policy can be tailored for single-family homes, condo units, apartments or mobile homes. Until now, Citizens had used a basic policy for all types of properties.

There could be more premium collected because of adjustments in the insured value of a home, says Jeff Grady, president of the Florida Association of Independent Agents that’s based in Tallahassee.

A couple of changes could increase premiums or costs for homeowners. Citizens will be verifying replacement costs on homes, which could require owners to purchase more coverage. The company says if a homeowner doesn’t agree with its replacement cost estimate, the homeowner can have an appraisal done to verify replacement cost.

Also, the insurer won’t renew policies on homes with shingle roofs more than 25 years old. All other types of roofs such as tile have to be less than 50 years old. Otherwise, homeowners must replace them or have them certified for an additional three years by a licensed contractor.

”Citizens wants to have a better feel for what its true replacement costs could be,” added Weiner.

Some agents believe the requirement to replace older roofs might be hard to enforce, especially if homeowners complain to the Department of Financial Services and legislators that the cost is too much to bear in this flagging economy.

”My guess is that a lot of pressure will be brought on Citizens to be a little more lenient and drop the roof requirement,” adds Grady.

Nestor Rivero, owner of Tropical Insurance, an agency in West Miami-Dade, says the new system will make it easier for agents to provides quotes on policy premiums for clients. But the change is “a lot of work for us and a lot of aggravation for the insured.”

He says homeowners who pay their own insurance premium should begin the reapplication process as soon as they get their renewal notice so they have enough time to get a check to Citizens; otherwise the renewal won’t be processed.