Alternatives to Citizens Property Insurance Corporation (Florida FAIR Plan)

Citizens Property Insurance Corporation (Florida FAIR Plan)

In response to the unwillingness of the private insurers in Florida to assume property risks in the coastal areas of Florida, Citizens Property Insurance Corporation or FAIR Plan was implemented by the Florida Legislature in 2002 as a non-profit government entity. The company’s mission is to provide insurance protection to Florida’s property owners who are unable to obtain coverage in the private insurance marketplace after being deemed high risk often due to filing too many home insurance claims but sometimes even due to location.

Because of its geographic location, Florida has become a hotbed for natural disasters of epic proportions. Every year the state is threatened in some manner by Atlantic tropical storms and hurricanes. Many parts of the state are also sitting on thin layers of limestone and are susceptible to sinkholes and catastrophic ground collapse. Areas up and down the coastline have been designated as “wind pool” areas and the private market insurers have declined to offer coverage there deeming it to be too high of a risk for the insurers to take on.

As the company grew in policyholders and developed risks that could not be sufficiently covered by reserves, the company implemented the Property Insurance Clearinghouse which is designed to depopulate the company’s policyholders to private market companies willing to assume some of the high risk policies. Many new companies are now willing to enter the marketplace by way of the Citizens/FAIR Plan depopulation program which has resulted in smaller companies instantly developing a homeowners book business that can be expanded upon in the private marketplace.

An astonishing 63 hurricanes or tropical storms have affected the state of Florida since 2000 and have caused more than $64 billion in damage to Florida homes and businesses and causing millions of claims. Additionally, these storms were responsible for 69 direct fatalities and at least 82 indirect casualties during this period. Some of these issue became liability claims due to debris and personal injury incurred by the debris even well after the storm. Hurricane Charlie, a Category 4, is listed as the strongest hurricane to make landfall since Hurricane Andrew, a Category 5. It does not, nor do many in the past, compare to the devastation of Andrew with the $26 billion in homeowners insurance claims and 44 fatalities. Back when this happened there had to be a major discussion about the increased need of the Florida FAIR Plan to have the necessary liquidity to expand if there were to be future large scale claim events.

For those home and business owners seeking to obtain Florida property and casualty insurance in coastal and low lying areas, Citizens Property Insurance Corporation is an avenue since the many major private market insurers refuse to offer coverage in these areas. With enough diligence they will also find that the private market does have many better high risk home insurance policies than the Florida FAIR Plan can offer.

As with all FAIR Plans, consumers are urged to try to find coverage in the private market and we can help you find an agent that can help you find alternatives to the FAIR Plan.