Fla.’s Citizens Responds to Agents’ Advisory on Coverage Gaps

Responding to a consumer advisory about potential coverage gaps issued by the state’s independent insurance agents, Citizens Property Insurance Corp. maintained that its basic coverages match what most private insurers sell.

Citizens acknowledged, however, that it does not offer some of the optional endorsements or coverages available from private insurers that that go beyond the basic coverages.

Citizens was responding to a Florida Association of Insurance Agents’ study cautioning consumers about gaps in coverage between what Citizens offers and what is available from private insurers.

But, according to Paul Palumbo, senior vice president of underwriting,
Citizens offers a comprehensive multi-peril homeowner’s policy that provides industry standard coverages based upon forms published by the Insurance Services Office (ISO) and used by private insurers.

All of Citizen’s multi-peril homeowner policies are written on the “special form” which provides the most comprehensive coverage, according to Palumbo.

Given that Citizens uses ISO forms, Palumbo maintained that most of the limitations cited by the FAIA are standard throughout the industry, specifically:

• Limited loss of use coverage – 10 percent of Coverage A limit is a standard in the industry, although some private carriers offer 20 percent.

• Personal property coverage – the 50 percent limit is standard in the industry, although some private carriers allow that limit to be increased. Palumbo said Citizens has not received any requests to increase this limit, but it has received “countless requests to allow decreases.”

• Scheduled personal property (floaters) not available – this type of coverage is for items not covered under a basic policy. Coverage for these items is available in the private market on a stand alone policy.

• Watercraft liability – following the ISO standard form, Citizens does provide liability for boats under 26 feet. However, the ISO standard form does exclude coverage for boats larger than 26 feet and boats power engines exceeding a specific horsepower.

• Extending liability to rental property or vacation home – following the ISO standard form which excludes this coverage, Citizens does not provide this coverage. Some private carriers offer this endorsement for an additional fee.

• Liability limited to $300,000 – the standard industry’s base limit is $100,000. Citizens offers limits of $100,000 and $300,000.

• Medical payment coverage – the standard industry base limit is $1,000. Citizens provides a limit of $2,000.

• Home-based business not covered – following the ISO standard form, Citizens does provide some coverage for incident business. Some private carriers offer this endorsement for an additional fee.

• Personal injury – following the ISO standard form which excludes this coverage, Citizen does not provide this coverage. Private carriers may offer this endorsement for an additional fee.

Citizens further noted that Citizens provides theft coverage but only if the theft occurs on the residence premise and it does not provide animal liability, which some private carriers do.

FAIA President Jeff Grady said Citizens’ growth equates to the downfall of the private sector. Fewer choices in the private market is a direct result of Citizens’ growth, he noted.

“It’s a quid pro quo,” Grady said. “Private companies can manage their own exposure, but often they can’t manage the exposure placed on them by Citizens – in the form of assessments.”

Grady said Citizens’ did not address the assessment aspect of the FAIA’s consumer advisory. He said that each of Citizens three accounts historically show deficits.

“Companies are withdrawing from the state and choices are beginning to evaporate as Citizens gets bigger by the day.”

Source: Citizens Property Insurance Corp.