State insurer issues a freeze as Fay nears

If you were planning on beefing up your homeowners insurance policy, you might have to wait until next week.

Want to get a good idea of when you can go ahead and add that $50,000 in coverage you have been thinking about? Go to the home page of Citizens Property Insurance Corp. -- www.citizensfla.com -- and wait for the flashing red light to go away. On the top left, you will see a map of Florida and a flashing red bar next to it with the words: "STATUS: NO BIND."

Starting on Sunday morning, Citizens Insurance Co., the state' largest home insurer, stopped writing policies or upgrading existing ones because of Tropical Storm Fay.

The best guess as to when these restrictions might get lifted depends on the storm's intensity and path, but it is a fair guess that it might be until Monday.

"We could still be closed for coverage changes Thursday and Friday depending on how fast it goes through and where it hits the state," said Angie Wiggin, head of the personal insurance lines department at Sarasota's Purmort & Martin Insurance Agency.

The freeze on policies also puts a hold on any real estate closings this week, unless the buyer is making the acquisition without the use of a mortgage. If the property is to have debt on it, insurance will undoubtedly be required by the lender.

Citizens made the determination to stop writing policies or changing them starting at 5 a.m. on Sunday, spokesman John Kuczwanski said.

"We do have our guidelines that say if there is a tropical storm or hurricane watch anywhere in Florida, we are under binding restrictions," Kuczwanski said.

Within a short time after that 5 a.m. Sunday threshold was passed, Citizens had e-mailed 8,000 insurance agents throughout Florida who write policies.

Citizens is now an insurance giant in Florida, with 1.2 million policies in force. So even though its decisions to freeze coverage are not binding, they tend to be a reliable indicator of what all the other carriers will do.

"Most of the companies use Citizens," Wiggin said. "If Citizens closes, they close."

"Most of the carriers have been hurt so bad in '04 and '05, they are quick to close and they are very good at staying closed until all threats are past," Wiggin said.

"When there is a hurricane watch or warning, nobody can go out and buy insurance," said Scott Johnson, executive vice president of the Florida Association of Insurance Agents. "It is because everybody would, if you catch my drift. You can't just buy coverage when you see a storm is coming."

The good news is that -- except for these temporary restrictions -- it is generally feasible to get a homeowners insurance policy, which has not been true in recent years.

"Minus a couple of underwriting restrictions and the house not being in dis Kuczwanski, the insurer's spokesman. "As far as getting coverage in the private market: the market is in recovery and we are seeing policies being taken out of Citizens."

While the biggest carriers have been backing out of the state, smaller, Florida-specific carriers such as First Protective have been writing new business, effectively filling the gap.

"First Protective has been here for a number of years," Wiggin said. "They've always been good on claims. Their rates aren't the cheapest around, but they're good."