Time to Pay the Piper for Hurricane Insurance Company Losses

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If you pay homeowner’s insurance, you could soon be socked with a $60 fee.

Citizens Insurance Corporation is talking about assessing every homeowner an extra $60 to make up a $400 million deficit thanks to last year’s four hurricanes in Florida.

The law allows it, but other insurance companies and even some top state officials say it might be time to change that law.

Your homeowner’s insurance bill may be about to go up 60 bucks. This time it’s not because your company is raising its rates. It’s because the state-run Citizens Property Insurance for people who can’t get insurance anywhere else is running $400 million in the hole from all the hurricanes.

Allstate Floridian’s George Grawe says that’s not fair. He thinks citizens should have been able to draw money out of the state’s backup disaster fund instead of your pocket.

“Frankly, it’s unfortunate, it’s not necessary that there be an assessment. If the Florida Hurricane Catastrophe Fund worked as it was designed, there would be no assessments.”

The CAT fund, as it’s called, works like an insurance company for insurance companies. Insurers must hit a certain amount of losses for each storm, like a deductible, before they can draw money from the CAT fund.

But private insurers think they and Citizens Property Insurance should only have to pay one such deductible before they can tap into the CAT fund. That would avoid assessments being passed on to you.

Florida Chief Financial Officer Tom Gallagher says the state should look at changing the law.

“I’m very concerned about any citizens having to pay more money for their homes and insurance for any reason.”

Citizens Property Insurance insists nothing’s been decided on the assessments. First the company has to figure out how deep in the hole it really is. It could be several months before you get stuck with the bill.

Insurance policy holders have been assessed nine times in the past for shortages in the state-run insurance pool. But if Citizens Property Insurance does turn out to be at least $400 million in the red, that would trigger the largest assessment to date.