The Citizens board could have opted for a lower 7.5 percent rate hike, but that would have been coupled with a new $15,000 limit on non-flood water damage. Several board members balked at that potential cost-savings measure, saying it would be far too low to cover damage from such things as burst pipes for many homeowners.
“I am opposed to any type of limit on water damage,” said board member Nancy Baily. “It’s a peril we need to continue to cover.”
One option would be to set a water damages cap but still allow policyholders to buy additional coverage if they wish. Several board members said they would return to the issue in the future. Water damage not caused by floods is one of Citizens’ major loss areas. The federal government sells flood insurance.
“I want to keep it on the table,” said board member John Wortman.
The 2013 rate increase will be higher in certain areas prone to sinkhole damage, mainly in the Tampa Bay area.
State-backed Citizens has grown to become Florida’s largest property insurer, with 1.4 million policyholders. Many private home insurers abandoned Florida as far too risky following the extremely active 2004 and 2005 hurricane seasons. Citizens now has a surplus of more than $6.1 billion, in large part because the state hasn’t been struck by a hurricane since.
