New plan from Citizens could have homeowners paying more for their insurance
Florida homeowners may soon see their insurance rates climb to new heights as the state’s Citizens Property Insurance Corporation begins looking into a new plan that would make changes to the limit imposed on insurance rates. The plan has already generated a fair amount of controversy because it removed the 10% cap on insurance rate hikes for new customers. This plan could have serious financial implications for homeowners throughout the state and lead to some losing their coverage because they can no longer afford their homeowner’s insurance policy.
Plan could raise rates by an average of 30%
Citizens revealed the plan late last week. The state-run company faced criticism from consumers and decided to investigate the plan further. Data provided by Citizens indicated that homeowner’s insurance premiums could rise by an average of 30% next year. This rate increase does not accurately represent what rates would be throughout the state if the plan were implemented. For homes that are located in disaster-prone areas, rates are expected to rise by more than 30%. Some homeowners may end up paying twice as much as they currently are for their home insurance.
Citizens cites financial concerns as reason behind the new plan
Florida’s Citizens Property Insurance has been facing serious financial problems the past two years. The insurance organization is one of the few places where Florida residents can find affordable coverage. As such, the company accounts for the majority of homeowner’s insurance policies in the state. Because the company provides coverage at rates lower than those offered by private insurance companies, Citizens has had trouble maintaining appropriate levels of revenue. This is one of the reasons behind the company’s plan to remove the restrictions on rate increases for new customers.
State officials petitions company to look for alternatives
The plan has yet to attain approval from the Citizens board of directors, but is likely to move forward due to the company’s financial needs. Governor Rick Scott, along with state legislators, has petitioned the board to look for alternative in an attempt to avoid the economic impact of the plan. Citizens claims that the plan will bring $100 million in revenue each year that it is active, which could be a boon if the state is hit by strong storms.