Citizens to Increase Commercial and Residential Policies in 2012

In Citizens Insurance, Commercial Market, Florida Hurricane Insurance, Florida Law Changes, Insurance Appraisal, Residential Market by Patricia Staebler

After the recent discussions to increase premiums for Florida condominium buildings, which are valued above the dreaded 10-million dollar threshold, and after general premium increases for all insurance carriers, Citizens Insurance has announced additional increases for Commercial and Residential policies. To which, I give a big thumbs down!

A big thumbs-down for the 2012 rate increases approved by our legislators

Here is a summary of the most important changes:

Commercial Policies:

  • As of 01/01/2012 all Commercial /Residential risks will be increased
  • As of 02/01/2012 all Commercial non-residential wind-only and Commercial/ Residential wind-only risks will be increased
    Rate changes will vary by policy type and are capped at 10%, excluding coverage changes and surcharges.
  • The 2009 Florida Insurance Guaranty Association (FIGA) was reinstated which will add 0.122 % to every policy.
  • Commercial /Residential multi-peril (Condos) will now have to be based on 100 % of the replacement cost value. Previously the coverage could be written for 80 – 100%.
  • The actual cash value loss settlement endorsement option was stricken; all buildings must now be written at 100% of replacement cost.
  • Office condos located in residential complexes will have to be written under the type of residential building it is located in.

Residential Policies:

  • As of 01/01/2012 all personal residential risks will be increased
  • As of 02/01/2012 all personal residential wind-only risks will be increased
  • Rate changes will vary by policy type and are capped at 10%, excluding coverage changes and surcharges.
  • The 2009 Florida Insurance Guaranty Association (FIGA) was reinstated which will add 0.024 % to every policy.
  • Renewal Policies will no longer have structures under Coverage B. There will still be a 10 % blank limit for other structures. An endorsement must be submitted to determine if cabanas, carports, gazebos, pools w/ enclosures, tiki huts, barns, screens, sheds and workshops can be added to the policy.

I think these are pretty substantial changes, which will definitely impact the Condominium Association industry. For your convenience here is a link to the latest changes.

Commercial Changes Citizens Insurance

Residential Rate Increases Citizens

Some questions remain to be answered: Florida was spared for several years from severe storms – where did all the money go to?

Why does Citizens have to collect FIGA assessments, (which literally means that Citizens is insolvent) — further see the FAQ at the FIGA website. The Merlin Law Group posted a nice blog in 2009 explaining the purpose of FIGA, a really good read.

Together with rising construction costs (yes, they do rise – unfortunately), the year 2012 will be quite interesting and challenging. One more reason to have your Replacement Valuation up to date and as accurate as possible.

As always thanks for reading my blog, please share with others who might benefit from this information by sharing on Twitter or Facebook.- Patricia Staebler, SRA, Bradenton, Florida

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