Florida’s state insurance company may suspend coverage for homeowners who have made Chinese drywall claims. According to an attorney representing about 300 claimants, Citizens Property Insurance has started to alert policyholders with the defective building material that their coverage will be dropped.
Citizens is the insurer of last resort for Floridians. And this is not the first time Citizens has told customers their coverage will be dropped. In 2009, one homeowner who had made a Chinese drywall claim received a letter from the company saying that the policy would be dropped because of the claim. He wasn’t alone. When the press got wind of the insurer’s decision, the company backed off. The same homeowner received a letter last week saying his coverage will be dropped in March.
The Chinese drywall issue has caused headaches for homeowners and insurance companies across the country. While the homeowners pursue their legal claims, insurance companies are trying to deal with the thousands of insurance claims. The question they wrestle with is if they can continue to cover the claims at all until the drywall problem is fixed. Fixing the problem isn’t easy, though. It can take months and can cost more to fix than a home’s purchase price — and until the problem is fixed, the home is uninhabitable. Homeowners/policyholders are stuck.
Citizens recently told the Legislature that the company has picked up an additional 200,000 customers this year — customers who have been dropped by their private insurance companies. The state insurer reported that sink holes, fraud and “artificially low rates” were the primary reasons these policies had been dropped. Drywall claims were not mentioned in the presentation.
Citizens recently instituted a 9.5 percent increase in personal lines and high-risk accounts. Florida law caps rate hikes at 10 percent per year.
Resource: Miami Herald “Drywall Could Trigger Cancellations” 01/18/11Share