Key Takeaways
- Citizens Property Insurance Corporation is Florida's state-created insurer of last resort for property insurance
- Citizens provides coverage when consumers cannot find coverage in the private market
- Citizens has three accounts: Personal Lines Account (PLA), Commercial Lines Account (CLA), and Coastal Account
- Take-out programs encourage private insurers to assume Citizens policies
- Citizens policies are subject to assessments that can be passed to all Florida policyholders
Citizens Property Insurance Corporation
Citizens Property Insurance Corporation is Florida's state-created insurer of last resort for residential and commercial property insurance.
Purpose and Function
Citizens was created in 2002 to provide property insurance to Florida residents who cannot find coverage in the private market:
Key Functions
| Function | Description |
|---|---|
| Residual Market | Provides coverage when private market unavailable |
| Depopulation | Works to move policies to private insurers |
| Catastrophe Coverage | Covers hurricane and windstorm losses |
| Sinkhole Coverage | Provides sinkhole coverage in designated areas |
Citizens Accounts
Citizens operates through three separate accounts:
Account Structure
| Account | Coverage |
|---|---|
| Personal Lines Account (PLA) | Personal residential, non-coastal |
| Commercial Lines Account (CLA) | Commercial property, non-coastal |
| Coastal Account | High-risk coastal wind-only and multi-peril |
Coastal Account
The Coastal Account covers properties in:
- 35 coastal counties
- Wind-only policies
- Multi-peril policies where wind coverage unavailable
- Higher risk, higher rates
Eligibility Requirements
To qualify for Citizens coverage:
Must Demonstrate
- Cannot obtain comparable coverage from private market
- Property meets minimum building standards
- No willing private market insurer
- Premium difference threshold met
Coverage Limits
| Coverage Type | Maximum |
|---|---|
| Dwelling | Varies by county |
| Personal Property | Actual cash value or replacement cost |
| Liability | Not provided (Citizens is property-only) |
Exam Tip: Citizens does NOT provide liability coverage. Homeowners must obtain separate liability coverage elsewhere.
Take-Out Programs (Depopulation)
Citizens actively works to reduce its policy count through take-out programs:
How Take-Outs Work
- Private insurer applies to assume Citizens policies
- Citizens identifies eligible policies
- Policyholders can opt-out (reject private offer)
- Private insurer assumes policies at renewal
- Citizens provides incentives to private insurers
Policyholder Rights
- 30-day notice of take-out
- Right to reject (opt-out) and stay with Citizens
- New policy must be comparable coverage
- Premium limits may apply to take-out offer
Citizens Assessments
Citizens can levy assessments to cover deficits:
Assessment Types
| Assessment | Who Pays |
|---|---|
| Regular Assessment | Citizens policyholders first |
| Surcharge Assessment | All Florida P&C policyholders |
Surcharge Limits
- Regular assessment: Up to 15% of premium
- Citizens surcharge: Up to 15% per year
- Emergency assessment: After major hurricane event
Rate Glide Path
Florida law requires Citizens rates to gradually increase:
- Rates must not be so low they discourage private market
- Annual rate increases capped
- Goal: Actuarially sound rates
- "Glide path" to market rates over time
Building Code Requirements
Citizens requires:
- Compliance with Florida Building Code
- Wind mitigation features for discounts
- Proper maintenance of property
- Inspections may be required
What type of coverage does Citizens Property Insurance Corporation NOT provide?
How many accounts does Citizens Property Insurance operate?