As a result, the state-run insurer could withstand the statistically unlikely occurrence of another Andrew-sized storm this year. Consumers not covered by Citizens may have to pay a small surcharge of no more than $17 for every $1,000 they pay in annual premiums (about $28 for the average homeowner).
The charges — which pale in comparison to the hundreds of dollars Citizens cites when it warns of dreaded “hurricane taxes” — might not come for at least two years after a storm.
Despite Citizens’ relatively strong financial position, Scott and insurance executives have painted the insurer as an over-exposed liability on the brink of financial calamity. They have used hypothetical examples of apocalyptic super-hurricanes to push forward rate hikes and coverage cutbacks, an effort to force consumers back into the limited private market.
The coverage reductions — many of which were enacted in the last 12 months — could significantly increase the out-of-pocket expenses for homeowners if a storm hits.
Kevin Roth, of Oakland Park, got a letter this year saying Citizens would no longer insure his screened-in porch or carport. Despite losing coverage for the so-called “detached structures,” his rates still went up.
If an Andrew-like storm hits the Fort Lauderdale area, Roth will be on his own for much of the repair-work.
“We’re talking between $10,000 and $40,000,” he said, upset that other homeowners have not voiced their disgust with the coverage cutbacks. “When the next hurricane comes — and it’ll come — people are going to submit claims and then Citizens is going to come and say ‘We told you. We’re not covering this’.”
Other recent changes at Citizens limit coverage for floor damage and sinkholes, repairs that homeowners may have to pay for out-of-pocket after a storm.
Roth said that after a storm, he would have to decide how much of his home to leave unrepaired, and whether or not to just flee the state.
Before any hurricane taxes come into play, most Citizens customers who suffer damages would have to pay an insurance deductible of several thousand dollars. The size of those deductibles has quietly been increasing under Citizens’ risk-reduction campaign.
“I would estimate I’d have to pay $5,000 to $7,000,” said Zbik, noting that he paid nowhere near that amount to have his roof rebuilt by State Farm back in 1992.
Citizens recently began using a controversial new home valuation software program that, in many cases, has increased the estimated replacement value of homeowners’ properties. As a result, deductibles — which are based on total value — have jumped as well.
For Joe Freitas, of Pasco County, the new valuation means he’ll have to spend $5,919 before his Citizens insurance kicks in to pay for damages. That’s a $2,444 increase from what he was required to pay before Citizens revalued his property with the new software, he said. Freitas has brought a class-action lawsuit against Citizens and Xactware, the company that created the valuation software.
In his lawsuit, Freitas claims homeowners “will suffer, not only from unreasonably higher premiums, but also from unreasonably higher windstorm deductibles due to Citizens’ and Xactware’s misrepresentation of property replacement-cost values.”