‘Opting out’ in homeowners’ insurance saga

Jun 3, 2008

Miami Herald–June 01, 2008

Q. I got a letter from Magnolia Insurance, which informed me that it was going to assume my homeowner’s policy from Citizens and, unless I were to contact them before Friday, the assumption would be automatic. The letter offered the opportunity to opt out of this and stay with Citizens.

I had no idea that Citizens was seeking to divest itself of any policies; I’ve never heard of Magnolia before. Could Action Line look into it?

— Jay Lewis, by phone

A.Magnolia is approved by the state Office of Insurance Regulation as a ”take-out” insurer — as in, taking policies out from Citizens’ realm — according to Citizens spokesman John Kuczwanski. What you’ve received is a depopulation letter, notifying you that Magnolia is assuming your policy unless you opt out. Consumers formerly had no choice in the matter, as Citizens is an insurer of last-resort funded by homeowners statewide, but the law has changed, and Citizens policyholders can now choose to remain covered by Citizens (which costs homeowners statewide).

Under Magnolia, your terms would remain the same, and Magnolia would be responsible for paying out any claims. Unless you opt out 45 days before your Citizens policy is set to renew, as the letter states, you’ll be given a new policy from Magnolia at an equal or lower rate. To opt out, you must mail back the bottom portion of the letter.

Depopulation letters are posted on Citizens’ website, and addressed in frequently asked questions. Visit citizensfla.com and scroll down to Depopulation.