What is the personal residential dollar limit under a citizens property insurance corporation?

With homeowners struggling to find coverage, insurance regulators are looking at the possibility of lifting a $700,000 cap on policies sold by the state-backed Citizens Property Insurance Corp.

Citizens is barred by law from providing what is known as a “replacement cost” coverage of more than $700,000 for homes, except in Miami-Dade and Monroe counties, where the limit is $1 million.

But as Florida’s property-insurance market has crumbled and home values have soared, many homeowners have been dropped by private insurers and cannot qualify for Citizens coverage because of the $700,000 cap.

Susanne Murphy, a deputy commissioner at the Florida Office of Insurance Regulation, said during a Citizens committee meeting Wednesday that regulators are analyzing whether they could increase the $700,000 cap in at least some counties.

State law would allow such a move if regulators determine that “there is not a reasonable degree of competition” in the counties. Such a finding is what allowed the $1 million coverage limit in Miami-Dade and Monroe counties.

“Whether there’s enough data to support that finding is what we’re trying to determine,” Murphy told members of the Citizens Market Accountability Advisory Committee. “The last time we did this (with Miami-Dade and Monroe), it was pretty clear … and I think that the data that we’ve looked at thus far is not as clear as it was years ago.”

Committee member Lee Gorodetsky, a South Florida insurance agent, said “clients can’t even squeeze into Citizens insurance, even though they want to or need to.” That has resulted, for example, in homeowners having to turn to what is known as surplus-lines coverage, which is largely unregulated and can include more conditions on policies.

Murphy, a member of the Citizens committee, said it will probably take another month before regulators decide on whether to lift the cap.

The discussion about the cap is more fallout from the troubled private insurance market, as carriers have shed policies and sought large rate increases to try to curb financial losses. Since February, five insurers have been deemed insolvent and placed into receivership.

Citizens, which was created as an insurer of last resort, has been flooded with policies during the past two years. As of Friday, it had about 1.02 million policies. By comparison, it had 499,056 policies on Aug. 31, 2020, and 687,079 policies on Aug. 31, 2021, according to data posted on its website.

The coverage cap also is tangled in longstanding efforts by state leaders to have homes insured in the private market, rather than by Citizens. Those efforts, in part, stem from concerns about financial risks if the state is hit by a major hurricane or multiple hurricanes.

Citizens policies had a $2 million coverage cap until lawmakers in 2013 passed a measure to gradually reduce it, with the $700,000 limit in place since 2017. Murphy said increasing the $1 million cap in Miami-Dade and Monroe counties — and potentially other counties — would require the Legislature to change state law.

Home values vary in different parts of the state, and most do not exceed $700,000. But the cap issue has drawn particular attention in high-value areas such as Broward and Palm Beach counties.

As an example, the metropolitan statistical area that includes Miami, Fort Lauderdale and West Palm Beach had a median sales price for existing single-family homes of $595,000 in July, according to the industry group Florida Realtors. In the area that includes Naples, Immokalee and Marco Island, the median sales price was $748,270.

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It’s not worth the low premiums!

With very little coverage, Citizens Property Insurance is Florida’s “insurer of last resort.”

The last few years have seen insurance premiums increasing at an alarming rate. Throw in unemployment caused by a global pandemic, and it’s no wonder many households are at a financial breaking point.

As a result, many homeowners are turning to the marketplace to seek out cheaper insurance coverage. In some cases, the cheapest option is a policy with Citizens Property Insurance.

But is Citizens Insurance a good choice for you? At Harry Levine Insurance, we caution our clients to never purchase a policy from Citizens if they don’t absolutely have to. In this article, we’ll give our three biggest reasons why and what you can do to find homeowners insurance that fits your budget.

What Is Citizens Property Insurance?

Citizens Insurance (formally known as Citizens Property Insurance Corporation) is a state-run, non-profit insurance carrier for Florida residents who are unable to find coverage from private insurance companies.

You may only purchase a Citizens Insurance policy if:

• No other insurer is willing to issue you a policy, or
• Coverage from private insurers is at least 20% higher than a similar Citizens policy.

Because of these reasons, Citizens is known as Florida’s “insurer of last resort.”

Typically, Florida property owners don’t turn to Citizens because they want to, but because they have no other choice.

What’s even worse is that there are some agents who steer customers toward Citizens simply because they don’t have access to the right insurance company.

For instance, they might be a “captive” agent, meaning they can only offer policies from a single company. Others might work with more carriers, but still have very limited options at their disposal.

Because the average Florida resident doesn’t know this, they go with Citizens and end up regretting it.

Reason #1: Low Prices, Lower Coverage

Because Citizens is ultimately a government entity, it does not have to worry about its financial health like a private company would. In fact, it’s a nonprofit organization.

While this keeps premiums low initially, it comes at a very high cost later (literally and figuratively):

• No coverage for car ports, porches, or screened enclosures
• No coverage for theft away from premises
• No coverage for pet liability (i.e. dog bites)
• No coverage for water backups
• No coverage for personal injury (including libel and slander)
• No more than $100,000 in personal liability coverage

And what coverage it does have comes with extremely low limits. For example, jewelry and electronics come with a mere $1,000 coverage limit.

Even policies that Citizen offers as endorsements carry a much lower limit than similar policies in the private insurance market. A mold endorsement is limited to $10,000, while you can find limits as high as $50,000 with other carriers.

To say it bluntly, Citizens insurance simply isn’t enough coverage!

Reason #2: Low Rates Are No Guarantee

With such low premiums and high-risk properties, how does Citizens Property Insurance have enough in the pool to reimburse all the claims they must have?

Sometimes, they don’t.

Whenever an insurance company has to pay out more than it brought in, they need to make a few adjustments to correct the course. This often means increasing premiums when you renew your policy.

However, if Citizens can’t afford to cover all claims, they can levy an assessment (up to 45% of your premium) on all policyholders.

If you switched to Citizens Insurance hoping to save money, this will likely come as a huge shock. In some households, it might even be impossible to pay the higher rate. But not paying your insurance assessment is a lot like not paying your utility bill. If you can’t pay, Citizens cancels your policy and your credit rate drops.

Once that happens, you’re left with the choice to pay out the nose for your premiums or go without insurance coverage.

Further, if the assessment on Citizens policyholders still isn’t enough to cover their losses, they are legally allowed to issue assessments on private market policyholders. Yup…every Florida insurance customer is susceptible to a Citizens assessment.

Sure, your premiums may be low initially, but it’s likely they will skyrocket as soon as the next hurricane comes through. In a state with so many severe storms—hurricanes and summer thunderstorms alike—is Citizens Insurance really a savings?

Reason #3: Not Everyone Is Eligible

When it comes to determining your premiums, insurance carriers don’t care about your income or how many bills you have to pay. But they do factor in the value of your residence and personal property.

Even if you can’t afford to purchase private insurance coverage, you may have to if those things are worth a certain amount. If the total value of your dwelling and your personal belongings is more than $700,000 (or $1 million in Miami-Dade and Monroe counties), you are not eligible for Citizens insurance coverage.

The Bottom Line: Steer Clear of Citizens!

If no other insurance company will issue you a policy, Citizens is certainly better than having no coverage at all.

But if you’re just hoping to save a few bucks in a harsh insurance market, we urge you to reconsider.

On their website, Citizens even admits that private insurers offer “more coverage options and less restrictive coverage than can be purchased from Citizens.” In a recent article in Insurance Journal, Citizens CEO and President Barry Gilway even stated that it was “unfortunate” that Citizens was becoming the first or only choice for some Florida homeowners.

When the President of your insurance company wishes he didn’t have to write you a policy, that should tell you something.

Even if a private market carrier costs you more per month, you’ll have better insurance coverage, more flexibility, and higher satisfaction than a Citizens insurance policy.

And if Citizens is really the best (or only) option for you, they’ll tell you.

Curious About Coverage?

Harry Levine Insurance can help!

We’ve been one of Orlando’s top independent insurance agents for more than 30 years and our staff have the knowledge, expertise, and resources to find the best coverage for your budget.

If another agent told you that Citizens was your only option, you deserve a second look. As a Harry Levine client, you can rest assured that you will never receive less-than-adequate coverage. We only offer policies that we know and trust.

Plus, we’ll offer you a selection of insurance quotes from multiple carriers and take the time to discuss your options so you can be sure that you’re getting the biggest bang for your buck.

Call today or fill out our online quote form to get started.

Who owns Citizens Insurance in Florida?

Is Citizens Insurance still in Florida?

What organization offers coverage on properties in areas of Florida deemed?