Well, doesn’t opt out’ sometimes mean ‘maybe later’?

Wed Jan 13th, 2016 on     Homeowners Insurance,    

We usually write about insurance companies that are eager to say no, even before the policyholder has asked the question. In its efforts to downsize Citizens Property Insurance Corp., though, the state has apparently allowed private insurance companies not to take no for an answer — and for property owners to find themselves having to accept insurance they did not want.

The Miami Herald recently reported on a disturbing trend among private insurers in the state. Consumers say the companies’ efforts to woo property owners away from Citizens are annoying at the very least and may be approaching harassment and fraud. The Florida Office of Insurance Regulation, however, says the insurers are well within the law — and well within their rights.

We have posted many times — as far back as September 2013 — about the state pushing Citizens to shed its low-risk policyholders; the technical terms for the process are “depopulation” and “take-out.” The state-backed insurer was designed to be the insurer of last resort, the company homeowners turned to when no private insurance company would sell them coverage. After a series of marketplace mishaps, though, private insurers left Florida, leaving homeowners with high-priced coverage and the more reasonably priced Citizens coverage.

Citizens soon bloated to an unwieldy 1.2 million policyholders, and state officials decided to do something about it. Lawmakers came up with a plan that it has tweaked over the past few years.

  1. Citizens sends information on policies up for renewal to the Property Insurance Clearinghouse a little more than two months before the renewal date.
  2. The clearinghouse determines whether the insured qualifies for Citizens coverage.

Policies are eligible if:

  • There is no comparable private market coverage available, or
  • Private market coverage is available, but the premiums are higher than the Ctiizens premium

They are ineligible if:

  • At least one comparable private market insurance company offers coverage at a cost equal to or lower than the Citizens renewal cost

This is all fairly straightforward. If the policyholder is ineligible for coverage, Citizens will send a nonrenewal notice. The policyholder must then go to private market insurance companies (or his agent) to find appropriate coverage.

The confusion comes when the policyholder may choose to renew with Citizens or may choose to go with a private insurer. We’ll explain in our next post.


Miami Herald, “Citizens policyholders face multiple ‘opt out’ notices,” Leila Miller, Jan. 9, 2016

Citizens Property Insurance Corp., Property Insurance Clearinghouse FAQs, sample letters and brochures at www.citizensfla.com/about/depopinfo.cfm, accessed Jan. 13, 2015

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