With very little coverage, Citizens Property Insurance is Florida’s “insurer of last resort.”
And yes, we know. When homeowners insurance premiums are climbing and your budget is already stretched thin, a lower premium can look extremely tempting. Nobody wants to pay more than they have to for insurance. That’s completely understandable.
The problem is that cheap insurance isn’t always good insurance.
The last few years have seen insurance premiums increasing at an alarming rate. In fact, the average homeowners premiums in Florida are three times the national average. It’s no wonder many households are at a financial breaking point.
As a result, many homeowners are shopping around for cheaper insurance coverage. In some cases, the cheapest option may be a policy with Citizens Property Insurance.
So, is Citizens Insurance good? Is it worth it? And if you’re reading Citizens insurance reviews trying to figure out whether the low premium is a smart move or a warning sign, what should you actually be looking for?
At Harry Levine Insurance, we caution our clients to never purchase a policy from Citizens if they don’t absolutely have to. In this article, we’ll explain what Citizens Property Insurance is, why it can be risky, and what you can do to find homeowners insurance that fits your budget without leaving you underprotected.
What Is Citizens Property Insurance?
Citizens Insurance, formally known as Citizens Property Insurance Corporation, is a state-run, non-profit insurance carrier for Florida residents who are unable to find coverage from private insurance companies.
You may only purchase a Citizens Insurance policy if:
- No other insurer is willing to issue you a policy, or
- Coverage from private insurers is at least 20% higher than a similar Citizens policy.
Because of these reasons, Citizens is known as Florida’s “insurer of last resort.”
That phrase is worth paying attention to. Citizens was not created to be the flashiest, most flexible, most generous insurance option in Florida. It exists so that property owners who can’t find or afford private coverage still have somewhere to turn.
Typically, Florida property owners don’t turn to Citizens because they want to, but because they have no other choice.
What’s even worse is that there are some agents who steer customers toward Citizens simply because they don’t have access to the right insurance company.
For instance, they might be a “captive” agent, meaning they can only offer policies from a single company. Others might work with more carriers, but still have very limited options at their disposal.
Because the average Florida resident doesn’t always know this, they go with Citizens and end up regretting it.
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Is Citizens Insurance Good? The Short Answer
Citizens Property Insurance can be better than having no insurance at all. If no private insurance company will issue you a policy, Citizens may be the only realistic option available.
But that does not mean Citizens is the best option for every homeowner.
If you are choosing Citizens only because the premium looks lower, it’s worth slowing down before you sign. A cheaper policy can still cost you more later if it comes with lower limits, fewer coverage options, or surprise costs after a major storm.
Think of it like buying the cheapest umbrella in Florida. It might technically be an umbrella. It might even look fine when the sun is out. But if it flips inside out during the first afternoon thunderstorm, did you really save money?
That is the concern with Citizens home insurance in Florida. The lower premium may look appealing, but the policy may not give you the protection you expect when it matters most.
Reason #1: Low Prices Can Mean Lower Coverage
Because Citizens is ultimately a government entity, it does not have to worry about its financial health like a private company would. In fact, it’s a nonprofit organization.
While this keeps premiums low initially, it comes at a very high cost later, literally and figuratively.
- No coverage for car ports, porches, or screened enclosures
- No coverage for theft away from premises
- No coverage for pet liability, such as dog bites
- No coverage for water backups
- No coverage for personal injury, including libel and slander
- No more than $100,000 in personal liability coverage
And what coverage it does have comes with extremely low limits. For example, jewelry and electronics come with a mere $1,000 coverage limit.
Even policies that Citizens offers as endorsements carry a much lower limit than similar policies in the private insurance market. A mold endorsement is limited to $10,000, while you can find limits as high as $50,000 with other carriers.
To say it bluntly, Citizens insurance simply isn’t enough coverage.
This is one of the biggest things to keep in mind when comparing Citizens insurance reviews or looking at Citizens home insurance quotes. The question isn’t just “How much does it cost?” The better question is “What am I giving up for that price?”
Reason #2: Low Rates Are Not Guaranteed
With such low premiums and high-risk properties, how does Citizens Property Insurance have enough in the pool to reimburse all the claims they must have?
Sometimes, they don’t.
Whenever an insurance company has to pay out more than it brought in, they need to make a few adjustments to correct the course. This often means increasing premiums when you renew your policy.
However, if Citizens can’t afford to cover all claims, they can levy an assessment, up to 15% of your premium, on all policyholders.
If you switched to Citizens Insurance hoping to save money, this will likely come as a huge shock. In some households, it might even be impossible to pay the higher rate.
But not paying your insurance assessment is a lot like not paying your utility bill. If you can’t pay, Citizens cancels your policy and your credit rate drops.
Once that happens, you’re left with no choice but to pay out the nose for your premiums.
Further, if the assessment on Citizens policyholders still isn’t enough to cover their losses, they are legally allowed to issue assessments on private market policyholders. Yup, every Florida insurance customer is susceptible to a Citizens assessment.
Sure, your premiums may be low initially, but it’s possible they will skyrocket as soon as the next hurricane comes through. In a state with so many severe storms, hurricanes, and summer thunderstorms, is Citizens Insurance really a savings?
Reason #3: Not Everyone Is Eligible
When it comes to determining your premiums, insurance carriers don’t care about your income or how many bills you have to pay. But they do factor in the value of your residence and personal property.
Even if you can’t afford to purchase private insurance coverage, you may have to if your home is worth a certain amount.
If the total value of your dwelling and your personal belongings is more than $700,000, or $1 million in Miami-Dade and Monroe counties, you are not eligible for Citizens insurance coverage.
This is why it’s important to compare your options carefully. Citizens is not simply “the cheap Florida home insurance company.” It’s an eligibility-based option for property owners who meet specific requirements.
When Citizens Property Insurance Might Still Make Sense
At this point, you may be wondering: “Okay, but what if Citizens really is my only option?”
That’s fair.
If no other insurance company will issue you a policy, Citizens is certainly better than having no coverage at all. Going uninsured in Florida is a much bigger risk than paying for a policy that isn’t your first choice.
The key is to understand what you’re buying.
A Citizens policy may make sense if you truly cannot find private insurance coverage. But even then, you should know what is covered, what is excluded, what limits apply, and what costs could show up later.
In other words, don’t buy Citizens because it looks cheap. Buy it only if it is genuinely the best available option after you have compared the market.
What to Do Before Choosing Citizens Home Insurance
Before you choose a Citizens policy, take a minute to compare more than just the premium.
Ask these questions:
- What coverage am I losing compared to a private insurance policy?
- Are my screened enclosure, porch, or carport covered?
- What are the limits for jewelry, electronics, mold, liability, and personal injury?
- Would I have coverage for theft away from premises?
- Would I have coverage for pet liability?
- Could I afford an assessment if one is issued?
- Am I actually eligible for Citizens?
- Has an independent agent checked private market options for me?
This is where working with an independent insurance agent can make a major difference.
Not sure where to turn? An independent insurance agent is your best choice when shopping for insurance. Because they work with multiple insurers, they have access to more options, so you can find the best coverage for your budget.
And if Citizens is really the best, or only, option for you, they’ll tell you.
The Bottom Line: Cheap Insurance Is Not Always Good Insurance
If you’re just hoping to save a few bucks in a harsh insurance market, we urge you to reconsider. It’s another insurance myth that having the lowest premiums will always save you money.
On their website, Citizens even admits that private insurers offer “more coverage options and less restrictive coverage than can be purchased from Citizens.” In a 2021 article in Insurance Journal, Citizens CEO and President Barry Gilway even stated that it was “unfortunate” that Citizens was becoming the first or only choice for some Florida homeowners.
When the President of your insurance company wishes he didn’t have to write you a policy, that should tell you something.
Even if a private market carrier costs you more per month, you may have better insurance coverage, more flexibility, and higher satisfaction than a Citizens insurance policy.
A lower premium feels good today. But if the policy doesn’t protect you when something goes wrong, that “savings” is only a myth.
Curious About Coverage?
Harry Levine Insurance can help.
We’ve been one of Orlando’s top independent insurance agents for more than 30 years, and our team has the knowledge, expertise, and resources to find the best coverage for your budget.
If another agent told you that Citizens was your only option, you deserve a second look. As a Harry Levine client, you can rest assured that you will never receive less-than-adequate coverage. We only offer policies that we know and trust.
Plus, we’ll offer you a selection of home insurance quotes from multiple carriers and take the time to discuss your options so you can be sure that you’re getting the biggest bang for your buck.
Call today or fill out our online quote form to get started.
Comments (8)
Stephen
August 15, 2022“Citizens is, in fact, bankrupt. If we experience hurricanes or other widespread covered disasters everyone will be in a tough spot, but Citizens policy holders will be the WORST OFF.” But you just got finished saying that, in the event of a major storm, Citizens can assess its policy holders extra, and even assess private insurance holders in the state.
Citizens is far from bankrupt: Citizens receives an A1 rating from credit rating agency Moody’s 7/2022. Perhaps the reason you don’t like them is that they only pay 7% commission on cheaper policies rather than the usual 11-12% paid by private companies on fat policies.
Julie Levine
August 18, 2022Hi Stephen,
Thanks for your input. Citizens, in fact, did NOT receive an A1 credit rating from Moody’s. A series of bonds that they have issued to raise badly needed capital and help bolster claims paying ability received that rating, which indicates only a “Stable Outlook.” Citizens is ultimately an entity of the State of Florida, which has one of the best credit ratings in the United States. Our state is one of a very few with a balanced budget, as well. Those are good things, including the stable outlook for those bonds, but you are discounting massive underwriting losses (hundreds of millions of dollars) at Citizens and woefully inadequate premiums (self-proclaimed by Citizens’ actuaries and executives). If Citizens were a private insurer, they would have major problems with the Office of Insurance Regulation and the Department of Financial Services. They are in a very precarious situation: they are hemorrhaging money on claims, and they are unable to recoup it through actuarially sound premium income. There is also the simple fact that Citizens only offers – by design – inferior coverage that does not even come close to providing the protection of most voluntary market insurer that use standard insurance contract forms. Citizens will also not even issue coverage presently on homes over $700,000 in insurable value.
Citizens is a very limited tool. It is designed as a last resort (self-proclaimed) for troubled/uninsurable risks. Citizens provides less coverage than nearly all standard insurance. There is simply no argument that Citizens is well-funded, offers robust coverage, has a profitable business model, or is a preferable product for Floridians. Unfortunately, like so many things I believe this has become politicized, and we have Side A (which includes Citizens itself) trying to point out that the mushrooming growth and financial position in and of the company is dangerous, would result in seizure and liquidation of any private insurance company, and the whole entity was designed as a backstop for non-standard insurance business. There is then Side B, which ultimately believes in and wants to accept a single insurer system (think health insurance debates here) for Homeowner Insurance in Florida. They hate the private market, and want a state entity to become the entire market. I can assure you that is not an outcome that bodes well in the long-term for anyone, though we may see it functionally happen for a brief period.
Harry Levine Insurance prides itself on matching each of our clients with quality insurance carriers who can promise to be there for them when needed. We drive our profitability solely by developing long-lasting relationships and providing the absolutely best experience that we can.
Thanks & best wishes,
Jason Levine, MS, CPCU
Liz
August 6, 2022There is a supplemental policy that I use to fill the gap of the $200k liability gap as well as provide Water backup, carries a sub limit, but something is better than anything. Also, most of my clientele is in south Florida and older roofs are a problem. They cannot obtain coverage from the private sector. I was around with hurricane Andrew and homeowners policies where $200 a year!
Jackie Moon
July 8, 2022Sounds to me like you dont write Citizens policies. You forgot to mention the unlimited water damage coverage as long as you use thier preferred carriers. You also forgot to mention that Citizens cant go bankrupt at anytime like all the private market carriers we have seen lately. Why did you spend so much time talking about the bad parts and no time discusisng the benefits. I would speculate that you arent appointed to write Citizens, and none of your private carriers can compete with their premiums so you are trying to tear them down. What a silly way to go about business.
Julie Levine
July 8, 2022Hi Jackie,
Thank you so much for your comment. I’d like to respond in two parts. First, I will address your assumptions. Second, I will reinforce why Citizens is an absolutely inferior option for Floridians.
Our agency has long been appointed with Citizens. In fact, the relationship goes back to time before Citizens Property Insurance Corporation was even formed. It’s predecessor entity was known as the JUA, or joint underwriter’s association. Similarly to Citizens the JUA provided a risk sharing home for hard-to-place risks that the voluntary market would not offer terms to. Coverages were limited, and premiums were never actuarially sound/properly calculated.
1. We write Citizens policies, and it pains us. In fact, year over year from 2021 to 2022 we have experienced a 10x increase in the size of our book of business with Citizens.
a. Did you know that per regulation agents cannot advertise that they represent Citizens? The company is an inferior insurer with a poor policy by design, and as such even the state discourages agents from using Citizens unless they must.
2. You have indeed found one circumstance where Citizens may offer broader coverage – as regards water damage and only when using THEIR contractors – than SOME private market carriers. They actually took this idea from private market insurers. It is NOT unique to them. It is in an attempt to curb run away litigation and inflated claims costs that are specific to water damage. The singular additional benefit that I can think of beyond this, is that Citizens offers terms to many risks when nobody else does; instead of nothing homeowners are able to get a meager something.
3. Citizens is, in fact, bankrupt. If we experience hurricanes or other widespread covered disasters everyone will be in a tough spot, but Citizens policy holders will be the WORST OFF. That is because Citizens has the right to assess their policy holders up to 45% of their existing premium in the event of insolvency. That means if you’re premium is $3,000 with Citizens, you can receive a bill from the company for $1,350. Failure to pay will put into the collections process, ruin your credit, and get your policy non-renewed leaving you with zero options moving forward. Private market policy holders can be assessed only up to 2%. So on that same $3,000 premium that maximum assessment is $60. Sixty dollars versus over thirteen hundred dollars.
a. Citizens estimates that it is currently 38% rate inadequate. That means they need a 38% rate increase to be solvent, but the Florida legislature years ago capped their annual maximum rate increase at 10%. So, should we have a 2004 or 2005-like storm season this summer you can expect that assessments will be necessary. They can carry on as bankrupt because they’re a government entity, in essence. Were they a private company the Florida Office of Insurance Regulation would have no choice but to take action against them.
4. Citizens offers NO:
a. Animal Liability. The top two most common Homeowner Insurance claims in the U.S. are water damage and injury from a pet/domestic animal.
b. Personal Liability coverage about $100,000, which creates a potential out of pocket gap of $200,000 – $400,000 if you have a Liability Umbrella Policy.
c. Off-premises Personal Property Coverage. Your student away at school has zero coverage for their things, where most other carriers offer up to 10% of your PPC limit when off premises. This includes things stolen from your car, which are almost always (never say never) NOT covered by your automobile insurance.
d. Screen enclosure coverage.
e. Please reread the blog article for more complete details.
I firmly believe that a silly, nay, derelict, way of doing business is haphazardly support and place business into Citizens. The company has inadequate financial standing, it stands to assess its policy holders to unaffordable levels, and it provides an insurance policy/contract that is intentionally designed to provide less coverage than standard policies in the voluntary market do. I would agree wholeheartedly that it is better to have Citizens available than to have a totally stalled market in which no coverage is available, but in no properly studied environment is Citizens Property Insurance Corporation a health, good, or value-based option for Florida homeowners.
Thanks again for your thoughts!
Dave
July 15, 2022Unlimited water damage coverage? I just put in a claim for water damage to my ceiling and roof and they denied it because there was no evidence of wind damage. So much for that. They came attached to my home purchase and my mortgage broker advised me that after the sale to wait a few months and then find another insurance carrier. I didn’t take his advice. I should have listened.
LISA
August 10, 2022They do write policies for Citizens! That’s the problem. They put them on blast but write policies for them. What’s worse, trusting a hypocrite (Levin) or Citizens who are clear about the minimum coverages that they offer.
Julie Levine
August 11, 2022Hi Lisa,
I’ll simply refer back to the fact base in my existing response. I’ll also reiterate that Citizens is a self-described insurer of last resort using inferior coverage forms to discourage non-necessary policy placement. Their practices of doing so are by the design of the Florida Legislature, and Citizens’ executive team and agent training curriculum openly acknowledge these facts of being, as well as the carrier’s 38% rate inadequacy (this year) and ability to assess/tax their policy holders and additional (up to) 45% of their premium.
We only sell Citizens when we must. It is a tool in the box, albeit a less effective and less desirable one than most others. Does it have positive features and uses? Yes. Are they few and far between? Also, yes.
Thank you so much for your engagement.
Jason Levine, MS, CPCU
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