What Citizens customers should know about taking on a takeout insurer
About 210,000 policyholders with home insurance from Citizens Property Insurance Corp. are getting letters from private insurance companies interested in their business. The big question: Should you stay with Citizens or go with a private company?
First, let me emphasize that you have a choice, and this is not a life-or-death decision, so relax. However, if you relax too much and ignore the letter with the takeout offer, you will wind up in the takeout company. In other words, if you don’t opt out, you are in (with coverage from the private insurance company).
A big concern of Citizens customers who get a takeout offer is the cost of insurance from the new company. The letter from the private company does not tell you what the premium charge will be when your policy renews. Why? Because they cannot tell you the price until they actually put your home’s characteristics through their own underwriting process – and they can’t do that without your permission. When your policy come up for renewal, you will get a notice telling you what the new rate will be. Your rate may be higher or it could be lower. Either way, you are likely to get more and better insurance protection and faster customer service from a private carrier who is competing for your business and wants to keep it.
Talk to your insurance agent about your options. Keep in mind that the Florida Office of Insurance Regulation has information of the financial status of take-out companies for your review. There is also a Q&A on the depopulation program from Citizens that is helpful.
If you are thinking about staying with Citizens, you must not ignore the ever-looming threat of assessments, which can total up to 45% after a major storm. That means the actual price you pay now for Citizens coverage could be much (MUCH) higher after a major storm. This is no idle threat – and the fact that it hasn’t happened before does not diminish it. It’s real.
It seems too few Citizens customers know about the assessment threat, and it may be that those who don’t know also don’t care since “tomorrow’s problem” seems like nothing worth worrying about today. I beg to differ.
Citizens conducted an assessment potential survey and released results last month showing:
- 89% of non-Citizens customers are not aware that they could be charged an assessment if Citizens is unable to pay its claims.
- 79% of Citizens customers also are unaware of the assessment risk.
The assessment risk is far greater for Citizens’ customers than those with a private company, meaning Citizens policyholders should not look only at the premium they pay today and decide that saving a few bucks in the present offsets getting socked with a big bill in the future. Citizens CEO has an encouragement letter going out to takeout candidates that makes this clear.
Always start reviewing your insurance protection by first considering how much insurance you need.