Citizens Property Insurance – Summary of 2012 Changes – so far….

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

After receiving literally every week Citizens Agent Communications with ever more rate increases, coverage limitations and restrictions, it is necessary to post a summary of these changes for my clients and readers. Now, more than ever, it is vital to have a current insurance appraisal (Citizens requires appraisals not older than 12 months) in place for your condominium association, homeowner’s association, apartment building or commercial building.

So here are the most important changes, which are current as of today. Stay tuned for more changes to come as Citizens is under a new leadership with a reinforced tone of risk decrease.

Personal Residential Multi-Peril and Personal Residential Wind:

New maximum coverage for residential property is $1 million as of February 1, 2012 for new policies and May 1, 2012 for renewals. This rule applies for both, multi-peril and wind-only.

Citizens will no longer provide Coverage A and B for the following structures, regardless if attached or detached:

  • Aluminum framed screened enclosures
    • Enclosed by screen on more than one side
    • Constructed to be open to the weather
    • Not constructed of and covered by the same or substantially the same materials as that of the primary dwelling
    • Aluminum carports and non-aluminum carports not construction of and covered by material substantially the same as the main dwelling
    • Awnings
    • Structures with certain wall coverings such as thatch, lattice, slats or similar material
    • Other structure open to the weather such as slat houses, chickees, tiki huts, gazebos, cabanas, canopies or pergolas

Commercial Non-Residential Multi-Peril:

The Business Income and Extra Expense coverage option will no longer be offered.

Commercial Residential Wind-Only and Commercial Non-Residential Wind-Only:

The Actual Cash Value option was removed and all properties need to be Insured To Value (ITV), which means that all buildings have to be insured at 100% of their replacement value. This rule is effective as of February 1, 2012.

A Wood-Roof Rule was added to the wind-only manuals to:

  • Clarify the Predominant Construction Rule
  • Simplify the construction-type determination for agents and policyholders
  • Move toward more consistent rules between the wind-only and multi-peril programs

The following statement will be added to the Definitions section of the Commercial Residential Wind-Only and Commercial Non-Residential Wind-Only manuals:

All buildings having wood roofs are classified as Frame or Masonry, except those meeting the definition of Superior Masonry or Heavy Timber.

In some cases this new rule will overwrite the Predominant Construction Rule, which states:

Construction types that are 33.3% or greater, rate the coverage with the construction class or type with the highest rate. Disregard any construction types that are less than 33.3 %.

Rate increases, which will apply to Condominiums, Homeowner’s associations and apartment buildings. Because A-rated properties are not subject to the statutory 10% limitation on the premium increase, Citizens can raise the premiums for these types of buildings:

The following increases apply:

Seacoast Zone 1 – 20.6%
Seacoast Zone 2 – 14.1%
Seacoast Zone 3 – 1.6%

These rate increases are effective March 1, 2012 for new policies and April 1, 2012 for renewals.

Discontinuation of Builder’s Risk Coverage:

Builders will be especially hit by this decision. Citizens will stop to write Builder’s risk effective March 1, 2012 for new business and June 1, 2012 for renewals. What will happen here is that builders will have no other choice then to turn to surplus lines which have significantly higher premiums and on top of this are not well funded. Therefore in case of a catastrophe, builders might face lower than replacement value payouts. See also the article in the Herald Tribune from April 2, 2012.

As always, thanks for reading my blog, if you have questions please feel free to call me or leave a comment.


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