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Florida residents being dropped by private insurance companies turn to state-backed insurer

Items inside of Maryalice Bessette’s house were taken outside after the waterline went over the outlets in her house. (Photo courtesy of Maryalice Bessette)
Items inside of Maryalice Bessette’s house were taken outside after the waterline went over the outlets in her house. (Photo courtesy of Maryalice Bessette)

Florida’s state-backed insurer, Citizens Property Insurance Corp., is becoming more popular as many Florida residents are dropped by their private insurance companies.

Florida's Citizens Property Insurance predicts to hit a record with nearly 2 million policies in 2023.

John Darr, an insurance agent at Darr Schackow Insurance Agency, said navigating the private insurance market has become very difficult compared to previous years because of hurricanes and other tropical storms.

According to the state insurance regulator, Florida homeowners accounted for 76% of all homeowners insurance lawsuits over claims filed nationwide in 2019.

The lawsuits caused the private carriers to lose money, so the companies’ only choice was to limit the number of policies they can write in Florida, which puts pressure on Citizens.

“If a homeowner needed home insurance coverage and they couldn’t find it in the private market, then we as an agency could try to place them with Citizens,” Darr said.     

Tracey Gillespie, a homeowner in Tampa and Port Orange, is one of the 400,000 Florida residents who has been dropped from an insurance company and forced to use Citizens.

Not only are people being dropped from their private insurance companies, but high rates are leading homeowners to cancel with private companies.

“All the companies are raising the premiums so high,” Gillespie said. “It’s forcing people to cancel with that particular company and look for somewhere else where they can get a better deal.”

She and her husband tried using State Farm to insure their Tampa house. However, State Farm wouldn’t insure their home because it is more than 20 years old.

To her, it seems like insurance companies don’t want to insure anyone in Florida because of hurricanes. But Florida residents pay their premiums every year, so she said she believes companies are still generating revenue.

“The moment they must start paying out, which is basically what insurance is for, they want to drop you,” Gillespie said. “They don’t want to know you anymore.”

While insurance rates are always high after hurricanes, residents saw a much larger jump this year.

Maryalice Bessette, a Fort Myers resident, was greatly affected by Hurricane Ian, and she did not have any problems with her homeowners insurance, Florida Peninsula Insurance Co.

“Our homeowners insurance did a great job,” Bessette said. “They were very quick with their payout, but we’re still waiting on the flood money.”

Her insurance company did raise its rates, but Bessette is still worried she won’t be with the same company next year.

“I don’t know what is going to happen next year, or if they are going to even renew us,” she said.

Her renewal was a month after the hurricane. She said she believes she wasn’t dropped from her current insurance company because of a Floridalaw saying companies can't cancel a homeowner right after a hurricane.

Gillespie said she is also very concerned about what will happen when another hurricane comes.

“Next year it’s probably going to go up, and I guess we will be going through this again, trying to find something cheaper,” she said. “But there isn’t going to be anything cheaper because the only option is turning out to be Citizens.”

Darr said if Citizens runs short of paying its claims, it can assess its policyholders in the state of Florida to make up for that shortfall.

“If there are situations where there are assessments, those that have bought Citizens’ policies will be assessed, what could be substantially more, than if they had bought it in the private market.”

With the next hurricane season starting in June, Florida homeowners will have to make the decision to choose Citizens Insurance or private insurance. For Gillespie, Bessette and many other homeowners across the state of Florida, they may not have a choice.