Perhaps you’ve received a piece of mail from an obscure insurance company stating that your current homeowner’s policy has been switched. Or, perhaps you were unsuspecting enough to have thrown the letter out because it looked like junk mail that appears in your mailbox every day.
The way Citizen’s Insurance is going about dropping coverage is angering many homeowners. Those who are being dropped by Citizens often do not see the opt-out letters that may prevent their policies from being transferred to smaller, untested, and often more expensive insurance companies who could collapse financially should a major disaster occur.
Here’s how the process is supposed to work…
- The “takeout” company, (the new insurance company), must send a letter to the homeowner at least 30 days before transferring the policy.
- The letter should include an opt-out form that must be filled out and mailed back to Citizens if the homeowner does not want to transfer.
- Citizens does not check to make sure that the takeout company actually sent the homeowner an opt-out form, but it does send an “encouragement to transfer” follow up letter that contains veiled threats of surcharges (up to 45% of the premium) should the homeowner decide against the transfer.
Citizens Insurance has been successful in dropping coverage for thousands of homeowners according to a recent Tampa Bay Times article. Unfortunately, homeowners are not getting a “like-for-like” insurance policy. The new players in the homeowner’s insurance market, especially those based in Florida, are a lot smaller than other insurance companies and their ratings are low, meaning they may become insolvent if a major disaster hits the state.
If you get a letter from an obscure insurance company now, or in the near future, don’t ignore it. Contact your agent if you have questions. Be proactive. Protect your home.