FindLaw KnowledgeBasePublished: 2012-03-27
Some Florida homeowners insured through the Citizens Property Insurance Corporation (CPIC) may receive some surprising offers from private insurance companies in the coming months.
The Citizens Property Insurance Corporation is the insurer of last resort in the state of Florida. It is trying to depopulate its list of insured homeowners by encouraging private insurance companies, known as takeout companies, to take over their policies.
The private insurance companies that qualify as takeout companies must be licensed and approved for Florida operation by the Office of Insurance Regulation and be backed by FIGA, the Florida Insurance Guaranty Association. These takeout companies may contact homeowners with CPIC coverage with offers to assume their insurance policies. Most active personal residential or commercial residential policies qualify to be depopulated and assumed by these takeover companies.
Takeout companies are not screened or regulated by CPIC. They may offer premiums that are lower than, equal to or higher than those offered by CPIC. Takeout companies can cancel or not renew assumed policies like any other insurance company, which means that homeowners whose policies are assumed may be back with CPIC in the future.
The Assumption Process
Most homeowners will not know their policy is being considered for takeover until they or their insurance agents receive a letter with an offer of assumption from a takeout company. If the offer comes directly to the homeowner, it will also include an Opt-Out form for the homeowner to fill out if they wish to decline the takeout company’s offer.
Note that it is an Opt-Out form, not and Opt-In form. Homeowners have 30 days from the time of notice to decline the takeout company’s offer of coverage before the assumption goes into effect. Once the 30-day window expires, homeowners will not be able to decline the assumption and return to CPIC as an existing customer, though they can reapply to CPIC as a new applicant.
When an offer of assumption occurs, homeowners and their mortgage companies will receive a Notice of Assumption and Nonrenewal from the takeout company. It is still possible to opt out of the assumption of coverage at this point.
If the offer of assumption is sent to a homeowner’s insurance agent, the agent can agree to the assumption, at which point an Opt-Out form will be sent to the homeowner. Insurance agents are prohibited by law to opt out of coverage for a homeowner. If a homeowner’s agent does not represent the takeout company, homeowners may need to change agents or work with the takeout company directly.
The Transition from CPIC to a Takeout Company
If a homeowner decides to accept a takeout company’s offer, he or she will still need to make CPIC payments and supply CPIC with any requested materials until the expiration date of the CPIC coverage. Claims filed with CPIC prior to the assumption will still be filled by CPIC after the assumption occurs.
The depopulation of CPIC’s list of insured homeowners is a confusing process that may leave homeowners confused and concerned about the status of their insurance coverage. If you are a CPIC policyholder and worry that your policy may be assumed by a takeout company, please contact an experienced insurance attorney as soon as possible.