Citizens is debating whether or not to increase the rates for new homeowners insurance policies.
Consumers, in Florida, taking out new homeowners insurance policies at Citizens may discover that they are being charged higher initial rates than existing policyholders with that insurer.
The result of a proposal being debated by the governing board at Citizens Property Insurance Corp. could mean that individuals taking out a policy from the state-backed coverage pool after January 1, 2013 may find that the rates that they pay are over 10 percent higher than the premiums that are currently being paid by policyholders.
This cap will continue to exist, meaning that though they may also see increases in their rates, they will not be as high as those paid by people taking out policies for the first time. Over time, though all customers will then be protected by the increase limit of 10 percent. There are currently 1.5 million policies that are sheltered by this regulation.
The board members at Citizens have said that those taking out new policies are not protected by the increase cap because they are brand new policies whereas those who have been a part of the pool already would be subject to the rule. Brand new customers have no current premium and therefore it is not technically considered to be an increase for them. Instead, it is simply the starting rate.
The rate increase cap was designed to protect existing homeowners insurance policyholders.
The reason that it was put into place is because it makes certain that the protection for some of the properties that are considered to be the riskiest will not suddenly become unaffordable to their owners who have been paying for coverage.
Though it had been suggested that the cap be removed for new policies, consumer groups, as well as vocal members of the senate have aggressively spoken out against it. Those parties had also criticized the attempts that have been made to increase the premiums at Citizens. According to Senator Mike Fasano (R-New Port Richey) has stated that the board of governors of the insurer is attempting to go around the Legislature, which has already stated that it does not want to see skyrocketing prices for those homeowners insurance policyholders.
For more insurance news headlines today.
