By: Paul Owers
South Florida Sun-Sentinel
As the housing market recovers from the six-year bust, a new rule from the state-run insurer of last resort could make it more difficult to get insurance for and sell older homes, industry observers say.
Starting Sept. 1, Citizens Property Insurance Corp. requires that new customers obtain four-point inspections for single-family homes older than 30 years to ensure that the electrical, heating, plumbing and roofing are in acceptable condition. Previously, Citizens required the inspections on homes older than 50 years.
To be eligible for coverage, the homes must have roofs with at least three years of life left. What's more, homes with polybutylene plumbing and electrical service of fewer than 100 amps no longer qualify for coverage. Making the appropriate upgrades could cost thousands of dollars.
The change doesn't apply to condominiums. Existing Citizens customers aren't required to get the inspections to renew their policies.
More than 202,000 of Broward County's 374,968 single-family homes are older than 30 years, according to an analysis of Florida Department of Revenue tax records. In Palm Beach County, nearly 127,000 of the 351,022 homes are older than 30.
While private carriers will insure older homes, owners may have to pay considerably more in premiums than they would through Citizens, said Evan Glassman, an insurance agent for Advanced Insurance Underwriters in Hollywood.
Citizens is by far the largest property insurer in the state, with more than 1.4 million policies.
The new rule could hurt home sales just as the market is stabilizing, real estate agents say.
"I think this is going to create another bottleneck for us," Fort Lauderdale agent David Thomas said.
He said a recent sale in Pompano Beach collapsed because the home had roof and plumbing problems. Another agent, Marisa DiLenge, said one of her buyers was interested in a Boca Raton home until he found out it can't get coverage from Citizens because it has electrical issues and a bad roof.
DiLenge said the new policy could affect many bank-owned homes, which typically are in poor condition. "And the banks don't fix things," she said.
Citizens made the change to reduce its uninsurable risk, said spokeswoman Christine Ashburn, who added that private carriers also require similar inspections of homes older than 30 years.
"Homes that are more than 30 years old are especially vulnerable to loss if systems and roofing are not kept updated," Citizens said in a statement. "It is the responsibility of every homeowner to properly maintain their property."
Robin Westcott, the state's insurance consumer advocate, understands why Citizens adopted the new policy, but she said it could price too many potential homeowners out of the insurance market.
"It's inconsistent with being the insurer of last resort," Westcott said.
In recent years, Citizens has raised rates and reduced coverage, saying it might not have enough money to pay claims after a major storm. It also has ordered home reinpections that have eliminated insurance discounts for customers.
"Citizens just does not get it," said Sean Shaw, founder of Policyholders of Florida. "They sit in their ivory tower and wonder why people attack them when they make decisions like this."