“People see that they still have catastrophic ground collapse (coverage) so they want to save money,” Whiting said.
All of Whiting’s clients who dropped the optional coverage have gotten what he calls the “ridiculously low’’ premiums.
Citizens says the premiums were determined by a mathematical formula that resulted in an “anomaly’’ when the sinkhole portion of coverage was removed from policies renewing this year.
“The formula worked as programmed but resulted in a rate that was lower than anticipated,’’ said Michael Peltier, a Citizens spokesman. About 1,500 to 1,600 homeowners already have gotten the break, and more are expected to as Citizens “tweaks’’ the formula, he said.
It is unclear whether homeowners will be able to keep the atypically low rates when their polices renew next year.
“Any solution would need to be worked out with the Office of Insurance Regulation, which must make sure rates are fair and not discriminatory,” Peltier said. “In the meantime, no Citizens policyholder will be overpaying on premiums.’’
The lower premiums mean less money going into the 2005 Florida Hurricane Catastrophe Fund to pay off claims from Wilma and other storms.
On the Spring Hill policy where the premium fell to $246, the amount earmarked for the fund dropped from $37 a year to $3.
“Citizens is clamoring about developing premiums to handle losses, yet this glitch in their system is lowering premiums beyond what any other company would charge,’’ Whiting said. “That’s not what Citizens is supposed to be about. We’re lucky to have Citizens, but it needs to get its ducks in a row.’’