TALLAHASSEE (CBS4) – State-backed Citizens Property Insurance Corporation has been a lifesaver for Floridians who have been priced out of the market by the large insurance companies. But that will all change under a new provision set to be unveiled in the state legislature next week.
State Senator Alan Hays plans on proposing that Citizens will not cover newly constructed homes in the state’s most hurricane-prone areas. Hays’ proposal will essentially keep Citizens from offering new policies in coastal and high-risk areas of the state.
Without Citizens, the dream of owning a home on the ocean would likely evaporate for all but the wealthiest Floridians. Or, they would have to be willing to live on the coast without any property insurance.
The proposal would also prohibit Citizens after June 1, 2012, from providing coverage to homeowners who remodel existing homes if the fix-up increases the value of their home by 50 percent or more.
According to the News Service of Florida, Hays and other right-wingers are pushing the idea because of their opposition to the state playing a role in the insurance business.
Citizens currently has $400 billion in exposure on coastal regions, but has $4.5 billion in reserves. It puts it roughly on par with some of the too big to fail banks who still don’t have the funds to cover their exposure.
The Hays proposal would be added to a bill that would allow Citizens to hike prices by as much as 25 percent on any single policy. It will also restrict who could purchase insurance from the state-backed insurer.
However, while the new Citizens bill will likely cost Floridians hundreds of thousands of dollars, the legislature is ready to take a hands off approach to letting other insurers set their rates for Floridians. This would leave Floridians to facing the spectre of insurance rates going up by double-digits each year.