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!
Here is a summary of the most important changes:
- 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.
- 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.
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.
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