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Sha'Ron James

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Citizens Implements Contract Changes to Address Florida Water Losses

News Article

May 10, 2016

Insurance Journal

Citizens Property Insurance Corp. is alerting policyholders to important policy changes beginning July 1 as part of the state-backed insurer’s efforts to improve communication and protect customers early in the claims process while controlling costs that it has said threaten to raise rates.

The Florida Office of Insurance Regulation recently approved a set of focused policy contract changes for Citizens regarding loss reporting, use of emergency services, and the nature of permanent repairs. According to a statement from Citizens, regulators approved the contract changes to address abuses of the insurance contract that are reducing consumer control, complicating claims, and increasing rates, particularly in South Florida. Citizens also says the disturbing trend is now spreading to the entire state.

Citizens said the policy contract changes (see below) were implemented to ensure that the use of emergency services is reasonable; that Citizens has the opportunity to assess the damage before additional permanent repairs are made; and that permanent repairs properly address the cause of the loss.

Specifically, the policy changes include:

  • In case of a loss to covered property, the revised policy contract requires policyholders to take emergency measures to protect insured property from further damage. Emergency measures only include what is reasonable and necessary to secure the home and prevent further damage, and may not exceed the greater of $3,000 or 1 percent of Coverage A limit, unless Citizens approves additional measures.
  • Second, to ensure that Citizens has the opportunity to inspect the damage and confirm coverage, the revised policy restricts when permanent repairs can begin. There may be no coverage for permanent repairs that begin before one of the following occurs: 72 hours after the loss is reported to Citizens, the loss is inspected by Citizens, or verbal or written approval is provided by Citizens. Note that these policy contract changes DO NOT require that a loss be reported within 72 hours.
  • Finally, when a home system (such as plumbing) suffers damage that causes a loss, Citizens has clarified that it will cover the access required to replace the part or portion of the system that caused the loss. Access to repair or replace parts and portions of the system not affected by the specific covered loss will not be covered.

The insurer said the revisions strike a balance between a policyholder’s need to make emergency repairs quickly and Citizens ability to control costs for all policyholders. The changes are needed, in part, to curb abuses involving assignment of benefits (AOB), under which policyholders give third party vendors the ability to control their claims following a loss, Citizens said. Citizens and other Florida insurance companies have warned the AOB problem with water loss claims is becoming a full-blown insurance market crisis.

“Protecting our policyholders after a loss remains the focus at Citizens,” said Chris Gardner, chairman of Citizens Board of Governors. “These changes will not affect our commitments to policyholders, but will help control costs, protect surplus and make sure we are ready when our customers need us most.”

Contract changes take effect beginning July 1, 2016. Existing Citizens policyholders will begin receiving notices later this month informing them of the coverage changes that will take effect when their policies renew. New policyholders will be informed of the changes when they apply for coverage.

Citizens is ramping up communication efforts about the upcoming changes through traditional media outlets and social media channels. Policyholders can also Call Citizens First through Ctizens’ toll-free claims hotline .

“It is critical as these changes take hold for insurance agents, home service providers, attorneys, and other stakeholders to provide accurate information to their members, clients, customers, and constituents,” Citizens said in its statement. “Such efforts make sure that policyholders remain in the driver’s seat to protect themselves, their families, and their property following a loss.”



Effective July 2016

The following policy language changes have been approved by the Office of Insurance Regulation for Citizens HO-3 (Homeowners), HO-6 (Condo Unit) and DP-3 (Dwelling) policies. The summaries of changes provided below are for informational purposes only and subject to relevant Citizens policy contract language.

Reasonable Emergency Measures
Policyholders must take Reasonable Emergency Measures (previously Reasonable Repairs ) solely for the purpose of protecting their property from further damage. To encourage prompt notice of losses and prevent abuse, reasonable emergency measures may not exceed the greater of $3,000 or 1 percent of the Coverage A limit, unless the policyholder first receives approval from Citizens.

Loss Reporting
To prevent permanent repairs being made prior to Citizens’ inspection, except for Reasonable Emergency Measures, there is no coverage for permanent repairs that begin before the earlier of:

A. 72 hours after Citizens is notified of the loss
B. The time of loss inspection by Citizens
C. The time of other approval by Citizens

Coverage C – Personal Property
Under Coverage C – Personal Property, the personal property of water or steam is not covered. Replacement of water in a swimming pool is covered when there is covered loss or damage to the swimming pool.

Additional Coverages
Collapse coverage states more explicitly that coverage for collapse of a building does not include coverage for collapse of plumbing that results only from age, deterioration or maintenance.

Perils Insured Against

  • Language stating that Collapse is not a Peril Insured Against now includes additional detail to better describe collapse.
  • Accidental Discharge of Water or Steam states that coverage is provided for necessary access to repair only the portion or part of the plumbing system that caused a covered loss.


  • Reasonable emergency measures may include permanent repair when necessary to protect the covered property from further damage or prevent unwanted entry to the property. To the degree reasonably possible, the damaged property must be retained for Citizens to inspect.
  • Citizens has no duty to provide coverage if failure to comply with duties after loss is prejudicial to Citizens.

Amended policy documents are available through OIR's I-File system by entering the following log numbers in the search box on the Quick Search tab:

  • FCP 16-02737 (PR-M HO policy forms)
  • FCP 16-02738 (PR-M DP policy forms)