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Citizens Insurance policeholders facing rate hikes

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TALLAHASSEE, Fla. – Nearly half a million Citizens Insurance policyholders can expect rate increases of close to 10 percent in the coming year. Water losses in South Florida are driving the increase. A third of those Citizens customers facing hikes are being asked by private companies if they want to leave Citizens, but there’s no guarantee a private company won’t hike your rate far beyond what Citizens is charging.

One Citizens bill awaiting the governor’s signature requires Citizens, not private companies, to notify policyholders that they are subject to being taken out of Citizens unless they act to start in the insurers of last resort. Currently, the notice coming from the takeout company and often viewed as junk mail.

Six insurance companies have been authorized to take over more than 167,000 Citizens policies between now and the end of June. The decision to change is up to Citizens customers, but Spokesman Michael Peltier said those customers shouldn’t make the decision lightly.

“In many cases, a private offer may include many things that Citizens' policies don’t, so it's real important, we think, for people to speak to their agents,” Citizens Insurance representative Michael Peltier said.

One reason to leave Citizens: In the case of extreme losses, homeowners could see surcharges of up to 45 percent. But one reason to stay is that Citizens' rate increases are capped at 10 percent.

This year and last, state lawmakers tried to cap private takeout company increases at 10 percent after they heard dozens of horror stories.

“What do we tell constituents that are in a traditional takeout offer? That their rates end up going up exorbitantly?” Sen. Anitere Flores said.

But capping takeout company increases did not pass. Consumer advocate Brad Ashwell said not limiting takeout rate increases was a major failing for consumers.

“Well, the real issue is that consumers are getting hit after they leave Citizens and go into these private policies," said Brad Ashwell, with the Florida Alliance for Consumer Protection. "If they don’t realize they’re getting pushed into these it's even worse, and that’s something the Legislature failed to address.”

Citizens customers who do leave, only to get stuck with higher rates in the private market, can go back, but only if the available policies being written by private companies cost at least 15 percent more than Citizens is charging at the time.