On Top of Florida Mortgage, Property Tax, and Energy Increases… There’s Insurance

The board of Citizens Property Insurance Corp. has approved a 2.07 percent assessment for Florida homeowners to cover losses from the 2005 hurricane season. The charge amounts to $20.70 on every $1,000 in property insurance premiums.

The assessment would have been larger, but state lawmakers in May agreed to pay $715 million to help cover the state-run insurer of last resort’s $1.7 billion in losses.

With 1.2 million policies, Citizens is the state’s largest provider of the necessary evil we call homeowners insurance. Teresa Badillo was shocked to learn that the insurance premium on her home west of Boca Raton had more than doubled to $5,050 per year.

And she was none too pleased about the terms of the payment plan offered by Citizens: Pay half now and the other half in 60 days.

“That’s a great payment plan, isn’t it?” Badillo said sarcastically.

Add that on to already-soaring Florida mortgage payments and you have a lot of people scrambling to pay the bills. Rocky Scott, a Citizens spokesman, acknowledged that the plan scarcely, if at all, provides viable assistance to homeowners hit with high premiums as a result of the destructive storm seasons of 2004 and 2005.

“That’s something we’re in the process of changing. What we’re trying to do is make insurance premiums more manageable for folks,” Scott said.

With Citizens’ prices, property taxes, mercurial energy prices, and the monthly costs of Florida home loans (for those with adjustable-rate mortgages) expected to keep rising, budgeting will become crucial for strapped homeowners.

“It’s easier to budget if you can pay it monthly, instead of all at once,” said Robert Hunter, the insurance director at the Consumer Federation of America, in an interview with the Palm Beach Post.

With the Florida housing market in a state of flux, the much-maligned Citizens has yet to decide the details of payment plans, such as whether payments would be made quarterly, monthly or twice a year. That task is just one more for the company, which officials say is understaffed as its policy count has soared.

Unlike Citizens, private insurers — who actually have to be competitive — tend to offer more generous payment plans. State Farm and Allstate let customers pay monthly for a fee of $1 a month.

At Allstate, only a third of policyholders use the payment plans. That’s because most Florida home mortgage lenders require escrow accounts that force homeowners to set aside money every month for property taxes and insurance. The homeowners who use payment plans typically don’t have mortgages or don’t have escrow accounts through their lenders.

Badillo and her husband decided this year to pay their premium all at once because their policy briefly lapsed. They were dropped by their former insurer, Tower Hill, and the policy ended just as Tropical Storm Ernesto hit and insurers suspended writing new policies.