Important policy changes for Citizens Property Insurance policyholders begin Friday as the state-backed insurer takes steps to control costs that it says threaten to raise rates. These changes stem from a statewide spike in water-damage claims.
For new Citizens customers, the changes will take effect immediately. The changes take effect for existing customers when their policies renew.
According to the changes, in the case of a loss such as water damage, Citizens’ policyholders must take emergency measures to protect property from further damage, though the cost may not exceed the greater of $3,000 or 1 percent of the overall coverage, unless Citizens approves additional measures.
To ensure that Citizens has the opportunity to inspect the damage and confirm coverage, the revised policy rules restrict when permanent repairs can begin. The company can deny reimburse for permanent repairs that begin before 72 hours after the loss is reported to Citizens, unless the loss is inspected by Citizens or Citizens gives approval.
When a home system (such as plumbing) suffers damage that causes a loss, Citizens has clarified that it will cover the access required to replace the part or portion of the system that caused the loss. Access to repair or replace portions of the system not affected by the specific covered loss will not be covered.
The changes were approved by Citizens' Board of Governors in January and by the state Office of Insurance Regulation in March. Other insurance companies have requested similar policy changes.
The policy change has been spurred by the practice known as “assignment of benefits,” in which policyholders sign over benefits to repair contractors who then, Citizens says, submit inflated receipts. Repair companies and attorneys have said Citizens routinely denies claims unfairly or offers too little compensation for proper repairs.
In a statement to the Sun Sentinel last month, insurance lawyer and lobbyist Reggie Garcia criticized the $3,000 emergency repair limit as “artificial” and the time restriction on permanent repairs as “unreasonable.” He called the policy changes a back door approach submitted after insurers failed to persuade the legislature to approve restrictions.
“Public hearings should have occurred prior to these policy changes, which would have given homeowners a better opportunity to be heard prior to some of their contract rights being taken away,” Garcia said in the statement.
Earlier this month, Citizens’ board approved an average 6.8 percent average statewide rate hike, but average increases in Miami-Dade and Broward for multi-peril coverage would range from 8.9 percent to 9.1 percent. The request will be reviewed by the Florida Office of Insurance Regulation, with public hearings slated for later this summer. About half of Citizens’ nearly 465,000 policies are in Miami-Dade, Broward and Palm Beach counties.
The Sun Sentinel contributed to this report.