BlogWednesday, March 02 2022
Citizens plays a unique role in Florida’s property insurance market by providing coverage to eligible policyholders who can’t find it at comparable rates in the private market. One reason Citizens is often the least expensive option is the way we’re built. Unlike a private insurance company, Citizens is required by law to levy assessments on its customers if funds set aside to pay claims have been exhausted after a major storm or series of less severe storms. For Citizens policyholders, those assessments can be substantial. While Citizens remains in a strong financial position, it’s important that you understand the assessment process and how it impacts you. Here’s how assessments work:
That can add up. For a single policy with a $3,000 premium, Citizens’ Policyholder Surcharge alone could mean an additional $1,350 charge when you may already be recovering from a catastrophic loss. Don’t panic! Citizens purchases reinsurance and sell bonds to protect its $6.5 billion surplus and reduce the chance that its customers will be hit by a “hurricane tax” when they are least able to afford it. Since 2015, Citizens has had sufficient claims paying ability to handle a 1-in-100-year storm without having to seek assessments. But the risk of assessment is real, especially as Citizens continues to see its policy count rise in the face of challenges in the private market. Citizens’ customers can reduce their assessment risk by finding coverage with another company. Talk to your agent, who is in the best position to help you find the option that best fits your needs. |