There is some good news in the otherwise bleak picture for customers of Citizens Property Insurance Corporation.
Citizens has changed its mind about phasing out insurance policies for thousands of builders around the state and will continue to issue the policies, at least for now.
Those policies are about to get a lot more expensive, which could drive housing costs even higher.
Homebuilders have to carry insurance for construction projects, and thousands of them in the state’s wind zone areas have had to rely on Citizens Property Insurance Corporation for coverage.
Citizens opted to start phasing out those policies last month after a nudge from the state’s insurance regulators, and builders freaked out.
At the Florida Home Builders Association, Doug Buck says cutting builders off without any kind of commitment from the private insurance market to pick up those policies would bring projects all over the state to a screeching halt, and that’s got major economic consequences.
“With this happening, no construction, then no taxes paid, and no people working, it’s potentially disastrous.”
Citizens carries about 6,000 builders polices throughout Florida. That’s about four and a half billion dollars of property under construction.
State officials decided it would probably be better to have a plan B before cutting off builders’ policies completely, so Citizens is now pledging to continue insuring builders until at least the end of the year. That’s the good news.
The bad news is, according to Rocky Scott of Citizens Insurance, builders rates are going to go up… a lot.
“The policies need to be able to pay for themselves and we haven’t had rate changes in these policies since the 1970’s, so it’s going to be more expensive.”
How much more is still undetermined, but bottom line, home buyers will ultimately be paying the price.
Insurance experts say even when builders can find private insurance, the rates they’ve been quoted are up to 10 times as much as they’ve been paying with Citizens. That means premiums could easily run well into the hundreds of thousands of dollars for builders.