What is Citizens Property Insurance Corporation, and how are they different from other insurance companies?
Citizens Property Insurance Corporation (“Citizens”) is a “state” sponsored insurance company, rather than an insurance company formed by private investors. The State of Florida created Citizens because there were locations throughout the State, especially in coastal environments, where the risk of potential damage exceeded the market. Meaning, there were places in Florida where insurance companies simply will not write insurance. Due to the fear of hurricanes in the Miami-Dade area, or sinkhole activity in Hernando County, without Citizens coverage, people would be uninsured. And, because insurance is important to everyone, the State had to step in. Also, since Citizens is usually the last insurance company you turn to, they are known as the “insurer of last resort.”
Although Citizens is an insurance company, they do not have to play by the same rules as other companies owned by private individuals. If you ever have to sue them, you cannot, for example, seek “bad faith” damages against the company, regardless of how bad they treat you. Sure, you can sue them for breach of contract, like other companies, but you cannot seek any kind of punitive damages against them. I will address these differences in another blog entry. Suffice to say, if you are a Citizens insured, especially when it comes to sinkhole coverage, you should see if you can find another, private insurer. Otherwise, you may be subject to the legislative whims of the State. While the Florida laws hit private insurers pretty hard for messing up claims, they are just as protective of theories against public companies like Citizens. Again, check out your options, and email us if you want some suggestions.
Have a burning question you”™d like to ask about sinkholes? Let us know.
Just now ready to purchase a home that was insured by Citizens and paid to remediate sinkhole activity for the prior owner. Would you not recommend using Citizens as well to insure me as well? If the remediation didnt work or something pops up, I can always go back and say fix it right this time around. Would that not be easier? I figure they have all the engineering reports and inspections on file.
If you are purchasing a sinkhole repaired property I would certainly ensure that you will be provided sinkhole coverage by whatever carrier you choose and that it will be affordable. If Citizens repaired the property before, they certainly not argue that you misrepresented prior problems to them which may not be a bad thing for you. Ultimately, I would just ensure 1) you can get coverage,2) it is affordable and 3) you disclose the prior sinkhole condition and supply the report stating it was repaired and you should be fine.
My father is trying to sell a property that has had a sinkhole repair done. The prospective buyers cannot find homeowners coverage that will include sinkhole repair. Is there any company that will insure a remediated home with sinkhole coverage?
Every insurance company follows different underwriting guidelines and have different levels of comfort with writing certain policies. I can tell you that we have had clients who repaired their homes and have been provided sinkhole coverage by another (or sometimes the same) carrier after the repair was completed. Literally, every situation is unique though so it is impossible to tell you what particular carrier would write coverage for this house. Obtaining coverage should not be an issue for other losses such as hurricane, fire or flood, just obtaining sinkhole coverage may be difficult. I assume the buyers are aware that sinkhole coverage is not a requirement in Florida any longer but just do not feel comfortable purchasing the home without it. Ultimately, your best purchaser may be someone who is satisfied with the repair work done and the certification from the engineer and does not care if they have sinkhole coverage as long as they have the other coverages mentioned above. It may just be a matter of waiting for that right buyer to come along unfortunately.
We are looking at purchasing a home that has had sinkhole remediation. According to the seller the house is not insurable due to the claim the previous owner took for the sinkhole repairs. It shows on the tax records that the repairs were $30,000 and the house is worth more then this. So I’m wondering if they took out a large claim and only used part of it for the repairs. It seems unfair this would affect the next owner of the home.
I am also in the process of buying a home that had a sinkhole issue and remediated. As I understand it there are 2 types of sinkhole coverage (1) catastrophic where the house becomes uninhabitable,(2)all other sinkhole issues & activity. I’m sure the second is most expensive. I talked to my parents neighbor who bought a sinkhole property that was remediated and he was able to get catastrophic coverage, by choice.