Orlando Harmon
Citizens Insurance is a not-for-profit insurer that offers last-resort coverage for Florida homeowners who cannot find insurance with a traditional insurer. Citizens Insurance policies are relatively high, with rates nearly three times higher than the national average. In 2023, Citizens recommended a 12% rate increase for Florida homeowners with multi-peril policies on their primary residence, and Citizens' President/CEO and Executive Director, Tim Cerio, has stated that Citizens' rates are artificially low. This has resulted in some policyholders being unable to recover from disasters such as Hurricane Ian.
| Characteristics | Values |
|---|---|
| Type of Insurance | Property Insurance |
| Purpose | To provide insurance to, and serve the needs of, property owners who cannot find coverage in the private insurance market |
| Target Audience | Homeowners in high-risk areas who have been turned down for affordable coverage with other companies |
| Coverage Options | Home, condo, unit owners, renters, mobile home, and flood insurance |
| Financial Strength Rating | Not available |
| Cost Rating | Expensive (\($\)) |
| Recent Rate Changes | 12.3% increase for policyholders insuring their primary residence; 6.4% increase for new and renewal home insurance businesses; 12% increase for Florida homeowners with multi-peril policies |
| Rate Comparison | 55% below actuarially sound levels; 30-40% below market rates |
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What You'll Learn
- Citizens Insurance rates are nearly three times the national average
- Citizens Insurance is a last-resort option for homeowners in high-risk areas
- Citizens Insurance rates are increasing by an average of 12.3% for policyholders
- Citizens Insurance does not offer flood insurance
- Citizens Insurance rates are 55% below actuarially sound levels
Citizens Insurance rates are nearly three times the national average
Citizens Insurance, also known as Citizens Property Insurance, is Florida's state-run insurance group. It was created in 2002 by the Florida Legislature as a not-for-profit alternative insurer to provide coverage to property owners who cannot find insurance in the private market. Citizens Insurance rates are relatively high and nearly three times the national average. This is particularly true for homeowners in high-risk regions who have been turned down for affordable coverage with other companies.
Citizens Insurance is a last-resort option for Florida homeowners who cannot obtain home insurance through traditional insurers. While Citizens Insurance rates are high, they are still 55% below actuarially sound levels and, in many areas, 30-40% below market rates. The company has proposed rate increases in recent years, with a 6.4% rate increase for new and renewal home insurance businesses approved in 2022. In 2023, Citizens recommended a 12% rate increase for Florida homeowners with multi-peril policies on their primary residences, with an average increase of 12.3% for policyholders insuring their primary residences.
Citizens Insurance rates for non-primary residences may be up to 50% higher than the previous year's rate to reach actuarially sound levels. The company's rates have been described as "artificially low" by its President/CEO and Executive Director, Tim Cerio, who has stated that a residual insurer should not compete with the private market. Citizens Insurance does not offer flood insurance and is not authorized to do so. Policyholders who are required to purchase flood insurance are urged to contact their insurance agents for assistance.
The high rates of Citizens Insurance may be unaffordable for some households, and failure to pay insurance assessments can result in policy cancellation and a drop in credit rating. Citizens Insurance has been described as "bankrupt" by some, and it may not be a good option for those seeking cheap homeowners insurance in Florida. However, it is important to note that Citizens Insurance rates are still below market rates, and the company serves the needs of property owners who cannot find coverage elsewhere.
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Citizens Insurance is a last-resort option for homeowners in high-risk areas
For those who can find lower-cost coverage elsewhere, Citizens is unlikely to be an appealing option. However, for Florida homeowners in high-risk regions who have been turned down for affordable coverage with other companies, Citizens may be their only viable choice. To qualify for a policy from Citizens, shoppers must demonstrate that private market quotes are more than 20% higher than Citizens' rate. This requirement ensures that Citizens Insurance remains a last-resort option, only available to those who truly cannot find affordable coverage elsewhere.
It is worth noting that Citizens does not offer flood insurance and is not authorized to do so. This is a significant consideration for homeowners in high-risk areas, as many policyholders have found themselves unable to fully recover from hurricanes or floods due to a lack of adequate insurance coverage. As such, homeowners choosing Citizens Insurance should carefully consider their level of risk and the potential impact of not having flood insurance.
While Citizens Insurance may be a necessary option for some homeowners in high-risk areas, it is important for them to be aware of the potential drawbacks. The relatively high rates and lack of flood insurance coverage could impact their ability to fully recover from disasters. Therefore, homeowners considering Citizens Insurance should carefully weigh their options and ensure they understand the limitations of the policy.
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Citizens Insurance rates are increasing by an average of 12.3% for policyholders
Citizens Insurance, or Citizens Property Insurance Corporation, is set to increase its rates for most policyholders in Florida. The average rate increase has been stated as 12.3% for policyholders insuring their primary residences. This is a significant rise, especially when compared to the previous year, where Citizens rates were, on average, 55% below actuarially sound levels and 30-40% below market rates.
The rate increase comes after Citizens presented a 2023 rate proposal to the Office of Insurance Regulation (OIR) that reflected the impacts of reinsurance costs, litigation, and recent legislative reforms. The OIR approved Citizens' request for a rate increase, and the new rates will take effect for new and renewal personal residential policies. Citizens is required by law to recommend actuarially sound rates, and the company has stated that the ability to charge these rates is critical to market recovery and promoting depopulation.
The rate increase will affect homeowners, condominium units, dwellings, and renters. Homeowner multiperil policy rates will increase by an average of 12.6% statewide, while condominium owners will see an average increase of 10.8%. Citizens policyholders who are affected by the rate increase are urged to contact their insurance agents for assistance.
It is important to note that Citizens Insurance is a last-ditch option for Florida homeowners in high-risk regions who have been turned down for affordable coverage with other companies. Citizens' rates are relatively high, so the rate increase may make the company even less appealing to those looking for cheap homeowners insurance in Florida.
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Citizens Insurance does not offer flood insurance
Citizens Insurance is a Florida-based insurance company that offers coverage for homeowners in high-risk regions who have been turned down by other insurance companies. Citizens Insurance does not offer flood insurance and is not authorized to do so. Flood insurance is a separate type of insurance policy that covers buildings, the contents of a building, or both.
As of April 1, 2023, new Citizens personal residential policies that include wind coverage for properties within the Special Flood Hazard Area designated by the Federal Emergency Management Agency (FEMA) are required to have flood insurance. This requirement will be phased in for existing Citizens policyholders over the next four years. It's important to note that flood insurance is not provided under standard multiperil policies offered by Citizens.
If you are a Citizens policyholder, you will need to purchase flood insurance separately to ensure you are covered in the event of a flood. Flood insurance can be purchased through the National Flood Insurance Program (NFIP), which offers coverage to property owners, renters, and businesses. The NFIP is the nation's largest single-line insurance program, providing nearly $1.3 trillion in coverage against floods.
Citizens Insurance rates are relatively high compared to other insurance companies. However, Citizens Insurance may be the only option for some Florida homeowners in high-risk areas who cannot find affordable coverage elsewhere. It's important to note that Citizens policyholders may be subject to a potential assessment of up to 45% of their premium following a major storm, which can significantly impact the cost of their insurance.
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Citizens Insurance rates are 55% below actuarially sound levels
To address this, Florida law now allows for higher rate caps for Citizens policies that insure non-primary residences. These rates may be up to 50% higher than the previous year's rate to help Citizens reach actuarially sound levels more quickly. This is especially important considering that Citizens is a last-resort option for many Florida homeowners in high-risk areas who have been unable to obtain affordable coverage elsewhere.
While increasing rates is necessary for Citizens' financial stability, it is essential to consider the impact on policyholders. Nobody wants to see their insurance rates go up, and Citizens must balance the need to charge adequate rates with keeping their policies affordable for their customers. However, it is worth noting that even with these rate increases, Citizens' rates are still, on average, 30-40% below market rates, making them a relatively affordable option for homeowners in need of coverage.
The challenge for Citizens is to strike a balance between charging enough to remain financially stable and competitive in the private market while also offering affordable rates to their policyholders. This delicate balance requires careful consideration and ongoing adjustments to ensure Citizens can continue serving Florida homeowners in need of insurance coverage, especially in high-risk areas.
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Frequently asked questions
Citizens Insurance is Florida’s state-run insurance group that offers last-resort coverage for Florida homeowners who can’t find home insurance with a traditional insurer.
Citizens Insurance rates are nearly three times higher than the national average. They are also, on average, 55% below actuarially sound levels and are, in many areas, 30-40% below market rates. Citizens Insurance rates have been increasing at an alarming rate.
Citizens Insurance is a not-for-profit alternative insurer, whose public purpose is to provide insurance to, and serve the needs of, property owners who cannot find coverage in the private insurance market. Citizens' rates are kept artificially low, which throws off the private market and distorts competition.
A pro of Citizens Insurance is that it may be the only possible choice for coverage for homeowners with property in high-risk areas. A con is that Citizens Insurance rates are relatively high, so it is not a good option for those looking for cheap insurance.
