Citizens Eyeing Builders Risk
Citizens Property Insurance Corporation will take a look at the merits of writing builders risk insurance certain coastal areas. However, advisors recommend that if Citizens resumes writing business risk, it should do so only where the coverage is unavailable from the private market “at any price.” As a competing consideration, Citizens recognizes that if it is the only market for the business risk policy, it very well might be the only market for the subsequent coverage on the structure as well.
The coverage would be limited to wind-only on personal lines property and therefore available only in territories of the Coastal Account. The ex-wind portion of the risk would be written by a private insurers.
Agents and lenders in South Florida point out that builders risk coverage generally is no longer available in the Florida Keys and other areas since Citizens stopped writing the coverage earlier this year. Builders risk also reportedly is unavailable under any circumstances for renovation construction projects on older homes in south Florida.
OIR General Counsel Belinda Miller said restoration of builders risk coverage by Citizens should be limited if it is approved by the board. It should be confined to areas where the coverage is not available from the private market at any price. “If they are going to do this, we hope they will do it very, very selectively…and make sure that if any carrier will offer it, that is the option the builder needs to take,” Ms. Miller told a Citizens committee. Citizens should not be writing builders risk at a lower, subsidized price which private insurers cannot match. It sends the wrong signal to builders when “they are getting subsidized at the outset,” she said. She also questioned why government is being asked to address issues such as the 10% deductibles being proposed in the market when builders have the alternative of providing collateral for the higher deductibles.