When it comes to buying windstorm insurance for her home, Mary Ellen Salvatore has two knocks against her: She owns a 35-year-old house and it's located east of U.S. 1 in South Miami Dade County.

For many insurance companies in Florida, Salvatore's house is just too old and too close to the water to cover. After her private insurance company dropped her and her search for another carrier was unsuccessful, the Palmetto Bay homeowner's only alternative was to turn to Citizens Property Insurance. Her $1,200 Citizens premium for windstorm coverage is more than double what she paid previously.

``No insurer wanted to touch my house,'' says Salvatore.

Unfortunately, she has plenty of company.

Citizens is the largest insurer in Florida, covering 1,057,829 homes, condos and apartment buildings. The biggest chunk of its policies -- $232.1 billion worth -- are written on riskier, coastal properties.

Now as forecasters keep an eye out for storms swirling in the Atlantic, this perennial question plagues Citizens: Will the company have enough money this hurricane season to pay claims if that proverbial storm -- the massive hurricane that may hit only once in a 100 years -- crashes into Florida?

With Citizens' rates frozen since 2007, the big worry is that the insurer hasn't been able to accumulate the reserves it needs given its exposure.

``We write wind coverage. That's why we primarily exist,'' says Sharon Binnun, Citizens chief financial officer. ``When rates are frozen, that reduces the amount of resources we have to pay claims.''

Insurance regulators, legislators and critics of Citizens say the company's frozen rates aren't actuarially sound. In laymen's terms, that means the insurer is not bringing in enough money through premiums to cover the bulk of the potential losses it could face after a huge storm.

To get Citizens' rates back on course, a law passed in May requires the insurer to raise rates 10 percent a year over the next five years. The smaller annual increases soften the rate shock for homeowners. But eventually, rates could end up about 60 percent higher.

However, when Citizens' staff did the analysis for the 2010 rate filing, it found that homeowners in some areas of the state would see rate decreases. Most of those policyholders are inland and live in northern areas of the state, but a fortunate few in South Florida could see a rate cut.

For instance, condo owners and renters in some sections of Miami-Dade and Broward counties -- as well as a handful of Key West homeowners -- could see decreases of as much as 10 percent because they were paying too much before based on the risk model the Citizens staff used.

The rate changes will kick in on renewals and new policies starting Jan. 1.

But Citizens isn't totally in dire straits. The insurer should have nearly $3.9 billion in cash in the bank by the end of the year, says Binnun.

Add in a guarantee from the State of Florida to buy $750 million of Citizens bonds, a bank credit line and proceeds from municipal bonds it has already sold and the total of available funds comes to $6.9 billion.

SAFETY NET

Citizens also buys back-up insurance from the Florida Hurricane Catastrophe Fund to cover some of the losses it might face. This year, it purchased nearly $9.8 billion in coverage.

All that gives Citizens the ability to cover up to $16.8 billion in claims.

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