Not every home purchase involves a home that is in great shape and ready to be occupied. And, in some cases, even though your home has earned a certificate of occupancy, the major home insurance companies continually cancel your policy after an inspection is completed.
What happens when you own a home that the major insurance companies call “high risk” or uninsurable? You have to be able to show your lender proof of insurance. You certainly want to make sure that your home will be repaired or replaced in the event of a natural disaster.
This is when you call a company like Citizens Property Insurance because they operate as a high-risk pool and are owned by the state.
Citizens is Florida’s FAIR plan and will typically offer home insurance when other companies say “thanks, but no thanks.”
What is a FAIR Plan?
The word FAIR which is used in this article is an acronym for Fair Access to Insurance Requirements. Almost every state has some form of FAIR plan that is typically administrated by the state in combination with private insurance companies.
Simply put, a FAIR plan is home insurance for high-risk properties that are considered uninsurable by the major insurance carriers. It is a policy of last resort for a homeowner or homebuyer who has been declined by other insurance companies.
One of the most well-known high-risk insurance companies is Citizens Property Insurance because of national news reporting when the major insurance companies stopped offering homeowners insurance in a large portion of Florida because of the onslaught of hurricane and sinkhole claims that brought many large insurers to their knees.
About Citizens Property Insurance
Citizens Property Insurance Corporation was established as a non-profit property and casualty insurer in 2002. Citizens, acting as a tax-exempt government entity, was created to fulfill its mission to provide home and property insurance to Florida property owners who were unable to purchase coverage through the private market.
Citizens Property Insurance is funded by the premiums collected from its policyholders along with assessments on non-Citizen policies whenever the company is operating in a deficit.
Citizens Property Insurance is a very transparent organization since it operates under the sunshine laws established by state legislators and as such, anyone can review the company’s budgets and financial statements since the company’s inception.
It’s important to note that Citizens Property Insurance is not in the business to compete with private insurance companies. In fact, Citizens continues its Depopulation plan year after year which allows private insurers to purchase Citizen policies that appear to be within their acceptable risk criteria.
Citizens also set up its Florida Marketing Assistance Program (FMAP) which is a referral service that allows agents to match property owners with private insurance companies who are likely to accept an individual risk.
Citizens Insurance Products
Citizens only offer two types of insurance products. They offer property insurance for personal dwellings and property insurance for commercial buildings, homeowners associations, and large condo projects that are used for residential or commercial purposes.
Citizens Insurance only offers homeowners insurance is not a car insurance provider.
Citizens also offers stand-alone wind policies for residential and commercial properties that are located in certain areas of Florida where wind coverage is excluded under a private insurance policy.
Citizens Homeowners Insurance
For residential owner-occupied homes, Citizens follows the HO3 package of coverages but there are limits applied for most of the coverages:
|Type of Coverage||What it Covers||Citizens Limits||Deductible Applied|
|Dwelling||Covers the structure of the home and any attached/built-in appliances||Dwelling limits are $25,000 to $700,000 except for homes in Miami-Dade or Monroe counties where the maximum limit is $1 million.||Yes - Flat amount or % of structure value|
|Other Structures||Covers any structures on the property not attached to the house such as fences, barns, workshops||2% to 60% of the dwelling coverage||Yes|
|Personal Property||Personal belongings inside and outside of your home||25% to 50% of the dwelling coverage||Yes|
|Loss of Use||Pays for temporary relocation expenses while the home is under repair||10% of the dwelling coverage||Yes|
|Personal Liability||Pays for medical expenses and legal expenses if found liability for injuries or property damage to a third-party||$100,000||No|
|Medical Payments||Pays medical expenses for third-party injuries regardless of fault||$2,000||No|
|Debris Removal||Covers the cost of debris cleanup caused by a covered peril.||$500||No|
|Unauthorized use of credit card or bank transfer and money fraud||Covers monetary losses typically associated with credit card theft or identity theft||$500||No|
|Loss Assessment||Helps pay for losses assessed by an HOA against members||$1,000||No|
Citizens also offers coverage for mobile and manufactured homes, renters, landlords, and condo owners.
Currently, Citizens Property Insurance only provides three optional coverages that can be added to a homeowner’s policy:
- Sinkhole Coverage – This coverage is distinct from the Catastrophic Ground Cover Collapse which is covered under the Citizens Homeowners’ insurance policy. The sinkhole coverage pays for structural damage that results from ground subsidence. This provides additional coverage for sinkhole damage which is common in a large part of Florida.
- Personal Property Replacement Cost – This option changes the valuation of your personal property from “actual cash value” to “replacement cost” where depreciation is not considered.
- Increased Ordinance or Law Limits – This optional coverage will pay for the additional expenses that result from a building code or ordinance that increases the cost of rebuilding your home. It pays on top of the regular ordinance of law limits already in your policy.
Discounts offered by Citizens Property Insurance
Although Citizens offers discounts that can reduce the premium of a homeowners’ policy, they do not offer near as many as private-market insurance companies offer:
Wind Mitigation Discounts
This discount is offered to homebuyers who have older homes that have been updated for wind mitigation which reduces the damage normally caused by hurricanes or tropical storms. A wind mitigation survey must be completed in order to take advantage of this discount. Newly-built homes generally qualify for this discount automatically.
Florida Building Code Compliance Discount
This discount is generally automatic for homes built after the first of January, 2002. Homes before 2002 and have had the roof updated to the 2002 Florida building code are generally eligible for the discount as well.
Roof Construction Discount
This discount is available for homeowners or homebuyers who have had their roof upgraded or replaced and haven’t already qualified for the Florida Building Code Compliance discount.
Central Fire Alarm System
Homes that have a centrally monitored fire alarm will qualify for this discount whether they have fire sprinklers or not.
Central Burglar Alarm System
Homeowners who install a centrally monitored burglar alarm system will qualify for this discount.
Who will Qualify for a Citizens Property Insurance Policy?
Only homeowners who meet the following criteria will qualify for a policy from Citizens:
- The homeowner is unable to obtain coverage from a Florida authorized private insurance company.
- The premiums charged by a Florida authorized private insurance company is more than 15% higher than what Citizens charges.
- A Citizens insurance policy can only be purchased through an approved Citizens independent insurance agent
Frequently asked Questions
Can I buy insurance from Citizens if they're cheaper than private insurance?
You can buy insurance from Citizens if the private market insurance is over 15% higher than the Citizens rates. You should note, however, that the Citizens policy coverage is more limited than private market homeowners insurance.
What is wind insurance?
Wind insurance is a stand-alone insurance policy the covers your home if it’s damaged or totaled because of a hurricane, severe storm, or tropical storm. It is purchased by homeowners who live in an area where wind coverage is excluded from a private market insurance policy.
Does Citizens sell home insurance in other states?
Citizens is a not-for-profit insurance company owned by the state of Florida and does not sell insurance outside the state’s boundaries.
How can I find a Florida agent who sells Citizens Property Insurance?
You can use Citizens’ agent locator on its website to find an approved agent near you.