Florida’s state-backed property insurer and state regulators have cleared the path for the insurer to begin issuing a new HO-8 policy by limiting it to low-value older homes, addressing concerns that the policies low rates could lead to a potential influx of policies into the insurer.
Citizens Property Insurance Corp. was required by law to start making the HO-8 policy available by January. As initially envisioned, the policy was intended to make Citizens less competitive with the private market by offering a more austere policy, although at a significant lower price.
An HO-8 policy typically provides less coverage than the popular HO-3 policy and pays actual cash value as opposed to replacement cost for damages. However, the HO-8 policy for Citizens became bogged down in controversy when the insurer and regulators could not agree on coverage details, underwriting criteria and rates.
Topping the list of concerns was that the policy would be offered to consumers who qualified for a standard HO-3 all-peril policy at rates roughly 20 percent cheaper, even though regulators required Citizens to offer full replacement coverage to make the policy acceptable to mortgage lenders.
Citizens Board Member Greg Rokeh said at a meeting in December that the policy would prove a draw, not a disincentive for consumers to choose Citizens.
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