http://www.sun-sentinel.com/business/fl-citizens-cancel-20120318,0,4071338.story
It may be hard to fathom, butCitizens Property Insurance Corp., the state-run insurer of last resort, can drop customers.
For non-payment, of course. But also for owning a house or condominium worth more than $1 million. Or having a roof that won’t last three years, and a few other less-common reasons.
Some who lose their Citizens coverage will have a difficult time finding a new insurer. If they do, it may be more expensive and less regulated by the state.
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Miramar
Last year, 261,663 Citizens customers left the insurer, lost coverage in the middle of the term, or didn’t have their policies renewed, down slightly from 2010, Citizens said. The insurer couldn’t say how many left on their own or the most common reasons the company dropped policies.
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Sean Shaw, founder of Policyholders of Florida, a consumer group, said the massive state insurer needs to shrink and should set limits on the types of homes it insures.
“But Citizens should be very careful about who they cancel because those people can’t go anywhere else,” Shaw said. “Citizens should act like they have a heart.”
Gary and Dianne Jividen, who have lived in their Miramar house for 48 years, didn’t know they could be dropped when they called to complain that their $1,600 annual Citizens premium increased by $550. They said a Citizens customer service representative told them they were lucky the insurer didn’t end their policy.
“It seems like they can do what they want to do,” Gary Jividen said. “They got you.”
But Citizens spokeswoman Christine Ashburn and local insurance agents insist Citizens can drop customers for fewer reasons than private carriers can.
For example, private insurers cancel homeowners for having certain dog breeds, such as pit bulls, said Rick Bogani, an agent in Wellington. Private carriers also frown on trampolines, diving boards and pool slides, he said. Citizens doesn’t generally cancel policyholders for those items, Bogani said.
With the state ultimately governing Citizens, the insurer is “not as picky with their underwriting because they know they really can’t be,” Bogani said.
Homeowners with mortgages are required by their lenders to have insurance. Some who get the boot from Citizens find comparable coverage from private carriers for not much more money.
Mostly, those homeowners are west of Interstate 95 with a property in good condition built in the 1990s, Bogani said.
Still, many private insurers don’t do business in Florida because they feel the state’s insurance rates are too low for the risks they have to assume, said state Sen. Mike Fasano, R-New Port Richey. For homeowners who can’t find private coverage, there are few options.
They may have to turn to less-regulated “surplus lines” carriers, which tend to be more expensive. These insurers don’t have to seek state approval in setting rates, and their policyholders can’t tap a state fund that helps pay claims when insurers fold.
Landry Johnson of Miramar ended up finding surplus-lines coverage for his grandfather’s house in Miami-Dade County. But Johnson, the executor for the estate, said that policy costs about $2,500 a year, a 47 percent increase from the Citizens policy.
Aside from surplus lines insurance, homeowners should be able to get reinstated with Citizens by replacing their roofs or fixing the problems that caused Citizens to drop the policies. They also can ask the insurer for a basic policy that offers much less coverage.
Regardless, homeowners should seek advice from independent insurance agents who represent the entire marketplace, industry watchers say.
“I had someone working for me,” Johnson said. “I wanted someone with experience in the field. At least I didn’t have to go looking on the Internet.”