Citizens eligibility and the 20 percent rule

Citizens is a residual market, so eligibility is not settled at issuance — it is retested at every renewal and every time an authorized insurer makes an offer. Two of the three numbers on this page moved recently, which is why older manuals get them wrong: the offer threshold was 15 percent before the December 2022 special session, and the flood requirement did not exist before it.

Questions and answers, explained

All 6 questions above, with the correct answer and why it is correct. Everything here is on citizens eligibility and the 20 percent rule.

1. A Citizens personal lines residential policyholder insures her primary residence, and her estimated Citizens renewal premium is $4,000. Through the Citizens clearinghouse program, an authorized insurer makes her an offer of comparable coverage at a renewal premium of $4,700. What is the effect on her Citizens eligibility?

   • AShe remains eligible, because the private offer costs more than her Citizens premium
   • BShe remains eligible for one additional renewal term and must move to the private market after that
   • CShe becomes ineligible only if the private offer is lower than her Citizens premium
   • DShe becomes ineligible for Citizens and must take the authorized insurer's offerCorrect

   Why: Under s. 627.351(6)(c)5.a., F.S., a personal lines residential risk that is a primary residence is not eligible for Citizens unless the premium for coverage from an authorized insurer is MORE than 20 percent greater than the Citizens premium for comparable coverage. Section 627.3518, F.S., applies that same eligibility threshold to offers received through the clearinghouse at renewal, not just to new applications. Here $4,700 is 17.5 percent greater than $4,000 — not more than 20 percent greater — so the offer falls inside the threshold and the insured becomes ineligible for Citizens. Two cautions. The 20 percent figure is specific to primary residences; a separate threshold under s. 627.351(6)(c)5.b. governs risks that are not primary residences, so the primary-residence fact in the stem is doing real work. And the threshold was 15 percent before the December 2022 special session, so older study materials show the wrong number. Citizens is a residual market of last resort and eligibility is tested continuously, not fixed at issuance.

   Reference ss. 627.351(6)(c)5. and 627.3518, F.S.

2. A Citizens personal lines residential policy that includes wind coverage insures a home in flood zone X with a dwelling replacement cost of $450,000. The policy renews in March 2026. Must the insured carry flood insurance?

   • ANo, because the home sits in flood zone X, outside FEMA's special flood hazard area
   • BNo, because the requirement applies only where a mortgage lender demands flood coverage
   • CYes, the phase-in reached dwelling replacement costs of $400,000 or more on January 1, 2026Correct
   • DNo, the requirement first reaches this policy on January 1, 2027, when it covers all others

   Why: Section 627.351(6)(aa), F.S., makes securing and maintaining flood insurance a condition of Citizens coverage for a personal lines residential risk, and lets the corporation deny coverage to an applicant or insured who refuses. Subparagraph (aa)1. phases the requirement in for policies effective on or after January 1, 2024 for a structure with a dwelling replacement cost of $600,000 or more; January 1, 2025 at $500,000 or more; January 1, 2026 at $400,000 or more; and January 1, 2027 for all other personal lines residential property. A $450,000 dwelling renewing in March 2026 is captured by the $400,000 tier. Option A is the trap: being inside a FEMA special flood hazard area only accelerated the requirement under (aa)2., which reached new policies issued on or after April 1, 2023 and renewals on or after July 1, 2023, so a zone X location does not exempt the risk, it merely leaves the value phase-in in control. Only policies that do not cover the peril of wind and condominium unit owner forms are excused under (aa)3. Option D inverts the schedule: January 1, 2027 is the date the requirement sweeps in all remaining personal lines residential property, not the date it first reaches a $450,000 dwelling, which the $400,000 tier already captured a year earlier.

   Reference s. 627.351(6)(aa), F.S.

3. A Lakeland homeowner who paid off his mortgage last year tells his agent he wants to drop windstorm coverage from his residential property policy to save premium. The home is not in an area eligible for wind-only coverage from Citizens Property Insurance Corporation. What does Florida law require before the insurer may exclude that coverage?

   • ANothing can be done; Florida law requires every residential property insurance policy issued in this state to include windstorm coverage, and any exclusion of that coverage is prohibited.
   • BThe agent may note the request on the application, and the insurer will process the removal of the coverage at the next renewal.
   • CThe exclusion is available only to Citizens policyholders located in Monroe County.
   • DThe insurer must offer the exclusion at his option, and every named insured must sign and date a statement he personally writes or types declining the coverage.Correct

   Why: Section 627.712, F.S. sets up a two-part rule. An insurer issuing a residential property insurance policy must provide windstorm coverage, and it must also make available, at the policyholder's option, an exclusion of that coverage. The exclusion cannot be effected on the agent's say-so. Where the policyholder is a natural person, the coverage may be excluded only if the policyholder personally writes or types and provides to the insurer the statement the statute prescribes — that the insured does not want the insurance on the home, mobile home or condominium unit to pay for damage from windstorms and will pay those costs — and signs it, with every other named insured on the policy also signing and dating it. If the structure is subject to a mortgage or lien, the policyholder must additionally give the insurer a written statement from the mortgageholder or lienholder approving the exclusion; because this homeowner's mortgage is paid off, only the signed personally written or typed statement is needed. One Florida-specific limit drives the facts: except for the mortgagee-notice provision in paragraph (2)(c), s. 627.712 does not apply to risks eligible for wind-only coverage from Citizens Property Insurance Corporation, which is why this home is placed outside that territory. The same section also requires insurers, except on condominium unit owner and tenant policies, to make available an exclusion of coverage for contents.

   Reference s. 627.712, F.S.

4. An agent submits a new Citizens personal lines residential application for a client's primary residence. The dwelling replacement cost is $780,000. The property sits in a county the Office of Insurance Regulation has NOT determined to lack a reasonable degree of competition, and no authorized insurer has offered the client coverage at any price. Is the risk eligible for Citizens?

   • AYes — with no offer of coverage from any authorized insurer, the residual market exists precisely to take a risk the private market has declined.
   • BNo — a structure with a dwelling replacement cost of $700,000 or more is barred, whether or not the private market has offered anything.Correct
   • CYes — the bar applies at $1 million, and this dwelling falls comfortably below that threshold.
   • DNo, but only because it is a primary residence; a seasonal or secondary home at the same replacement cost would be eligible.

   Why: Under s. 627.351(6), F.S., a structure with a dwelling replacement cost of $700,000 or more is not eligible for Citizens coverage. The threshold is raised to $1 million in areas the Office of Insurance Regulation determines lack a reasonable degree of competition — and the stem tells you this county is not one of them, which is why C fails on its own facts rather than on the number. A is the intuitive answer and it is the one to guard against: the absence of a private-market offer is what makes a risk eligible under the premium-differential test, but that test never comes into play for a risk the replacement-cost bar has already excluded. Citizens being a residual market does not make it a market of last resort for every risk, only for those the statute lets it write. D reverses the logic; primary-residence status governs which premium-differential threshold applies under s. 627.351(6)(c)5., not the replacement-cost bar.

   Reference s. 627.351(6), F.S.

5. An agent reviews four Florida personal lines residential risks for Citizens Property Insurance Corporation eligibility. Which one is INELIGIBLE?

   • AA Citizens renewal policyholder who has received an offer of comparable coverage from an authorized insurer at a premium 15 percent greater than the Citizens renewal premiumCorrect
   • BA Citizens renewal policyholder who has received an offer of comparable coverage from an authorized insurer at a premium 35 percent greater than the Citizens renewal premium
   • CAn applicant whose single-family home in Tampa has a dwelling replacement cost of $600,000
   • DAn applicant who has been declined for coverage by two authorized insurers in the private market

   Why: Citizens is a residual market mechanism, so eligibility turns on the absence of a reasonable private-market alternative. Under s. 627.351(6), F.S., a renewal personal lines residential policyholder becomes ineligible for Citizens coverage upon receiving an offer of comparable coverage from an authorized insurer at a premium that is not more than 20 percent greater than the Citizens renewal premium. A 15 percent differential falls inside that band, so risk A must leave Citizens; a 35 percent differential exceeds it, so risk B may stay. Option C is eligible because the statutory bar applies to a structure with a dwelling replacement cost of $700,000 or more, with the threshold raised to $1 million in areas the Office of Insurance Regulation determines lack a reasonable degree of competition. Option D describes the ordinary path into Citizens rather than a disqualifier. Agents should also track the flood requirement phased in for Citizens personal lines residential policyholders: as of January 1, 2026 it reaches structures with dwelling replacement cost of $400,000 or more, and it extends to all personal lines residential risks on January 1, 2027.

   Reference s. 627.351(6), F.S.

6. A Citizens personal lines residential policyholder whose dwelling replacement cost places her inside the flood insurance phase-in tells her agent at renewal that she will not buy flood insurance, because her home has never flooded and sits outside a special flood hazard area. What may Citizens do?

   • ANothing at renewal — the requirement binds only new applicants, and an existing policyholder is captured when the final tier arrives.
   • BApply a surcharge to the renewal premium reflecting the uninsured flood exposure, but continue the policy.
   • CContinue the policy with a flood exclusion endorsement, since flood is already excluded under the wind and property coverages anyway.
   • DDeny coverage — securing and maintaining flood insurance is a condition of Citizens coverage, and the corporation may deny an insured who refuses.Correct

   Why: Section 627.351(6)(aa), F.S., makes securing and maintaining flood insurance a CONDITION of Citizens coverage for a personal lines residential risk, and expressly lets the corporation deny coverage to an applicant or an insured who refuses. That is the enforcement mechanism, and it is stronger than the alternatives candidates reach for: there is no statutory surcharge remedy, so B is invented, and C misreads the point — flood being excluded from the property coverages is the reason the separate flood policy is required, not a substitute for it. A fails on two counts. The requirement applies at renewal, not only to new applications, and being outside a special flood hazard area does not exempt the risk. Subparagraph (aa)2. merely ACCELERATED the requirement for property inside a special flood hazard area; a location outside one leaves the insured on the ordinary replacement-cost phase-in schedule, which the stem says has already reached her.

   Reference s. 627.351(6)(aa), F.S.

Drill the whole domain

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• Types of Property Policies (14%)
• Additional Florida Statutes, Rules and Regulations (6%)

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