I have written before about my views on efforts to depopulate Citizens (see here). There is no question that Florida needs to strengthen its private insurance market and reduce the number of policies written by Citizens, which remains the largest insurer by far in the State. Florida’s legislature has tried a lot of different ways to encourage homeowners quit Citizens, including a deceptive “opt out” proposal that would have removed unsuspecting policyholders (see my discussion here).
The law currently requires homeowners wishing to obtain coverage through Citizens to prove that they either cannot obtain insurance elsewhere with an admitted carrier, or that private insurance would cost at least 15% more than a policy with Citizens. Many policyholders try to evade the rules to get coverage with Citizens. If the legislature needs to pass laws to restrict homeowners from buying coverage with Citizens, then it must be worth the effort to join the club, right?
There are a lot of reasons to avoid Citizens. It used to be the case that homeowners could obtain broader coverage with Citizens than in the private market. This is no longer the case, as Citizens has restricted coverage for many items, including carports and pool enclosures, and now generally will only insure a property’s main structure.
It also used to be the case that premiums on Citizens policies were significantly cheaper for many policyholders. This also is no longer the case for most homeowners. Citizens continues to increase its premiums 10% a year (or in some cases more, despite the law capping increases at 10%), has been aggressively revoking discounts meant to encourage hardening of homes, and continues to increase policy deductibles.
Since I represent corporate policyholders rather than individuals, I rarely encounter Citizens claims adjusters. But I can tell you from my limited experience that the claims adjustment process with Citizens is no better than the process with any other insurer. Citizens tries its best to delay and underpay claims like private insurers. It seems to be embedded in the claims adjuster’s DNA. I have never met an adjuster who did not recoil at the thought of paying full value on a claim.
The great equalizer for a policyholder in dealing with a difficult claims adjuster is to hire a coverage lawyer. Yes, in many cases a policyholder will benefit from hiring a public adjuster rather than a lawyer. Public adjusters can do a great job in fighting for policyholders, but they cannot file a lawsuit. Too often, despite a lot of hard work, public adjusters cannot get a successful resolution of a disputed claim because they cannot go to court.
This brings me to the recent decision in Castle Beach Club Condominium, Inc. v. Citizens Property Insurance Corporation, No. 3D11-160 (Fla. 3d DCA August 1, 2012). In Castle Beach, a Miami condo association sued Citizens on a disputed insurance claim. The suit was filed in Miami, but Citizens transferred the suit to Tallahassee, under the “home venue privilege”. Essentially, since Citizens is a quasi-governmental entity, it has certain immunities from suit. An important immunity granted to Citizens by the legislature is immunity from liability for bad faith claims handling. Now, the Third DCA has made it clear that Citizens is also protected from litigating coverage claims anywhere other than its home county.
What the Castle Beach decision means is that, if you have a disputed claim with Citizens, not only can the insurer act in bad faith with impunity, but Citizens can force you to go to Tallahassee to litigate your claim. This is a serious impediment to pursuing litigation against Citizens, as policyholders may need to hire two different lawyers (one local and one in Tallahassee), and also may need to travel a long distance to get their day in court. The legislature is effectively telling policyholders that, if they choose to insure with Citizens, they will be at Citizens’ mercy if they ever have a disputed claim.
All of this is designed, of course, to try to make purchasing insurance with Citizens so distasteful that only the truly desperate will do it. Unfortunately, there are a lot of very desperate homeowners in Florida right now. For those that have a choice, and hold a Citizens policy, I would suggest giving your insurance agent a call to discuss your alternatives.