Homeowners Choice In, Citizens Out

Posted January 19th, 2010
by HomeownersInsurance.org Staff (no comments)

umpireoutThe latest news from Florida show just how screwed up the homeowners insurance situation in that state really is.

The State of Florida has some screwy laws when it comes to homeowners insurance. Among other things, the state has a state-owned insurance company, Citizens Property Insurance Corporation.

The way that Citizens Property Insurance Corporation works is this: the company serves as a home insurer of last resort. This means that people that can’t get homeowners insurance elsewhere can turn to the company.

This sounds great, in theory. However, Citizens has become the largest homeowners insurance provider in the state, with over a million policies in force. The existence of Citizens and their position as a state-run provider has caused issues for other insurance companies. Combined with serious regulation of the insurance industry, the situation has led other private insurers, such as State Farm, to consider leaving Florida altogether.

The State of Florida encourages private insurers to step into the mix. The Florida “take out” program is set up to do just that. The program allows private insurers to assume some of the Citizens policies.

In December 2009, one company assumed 23,000 of the policies in the Citizens portfolio. While this represents a fairly small number of the overall Citizens policies, it’s a step in the right direction. Homeowners Choice, Inc., effectively increased its insurance policy holdings by 44% when it took over those policies from the state.

The assumption of these policies had to be approved by the Department of Insurance in the state of Florida. Other companies have applied to take over policies, and some have been approved. Most of the time, however, these requests are rejected because the insurance provider fails to meet specific criteria or because there are elements missing from the replacement policies.

Photo via jordanfischer

Categories: News

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