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Changes in Florida's homeowners insurance could cost everyone, expert says

More than half of the homeowner's insurance companies in Florida could soon get a rating drop from the agency that has reviewed the companies for nearly 30 years.

TAMPA, Fla. — When it comes to homeowners insurance in Florida, one expert said the market is not at its best level.

"Havoc for homeowners, havoc for insurance companies, and havoc for insurance agents."

Mark Friedlander from the Insurance Information Institute said 27 out of the 40 insurance companies in Florida are likely about to get downgraded in the rating given to them by an agency that has reviewed insurance companies in our state for nearly 30 years.

If those ratings drop, Friedlander said people may be in the hot seat.

"When you have a federally backed mortgage, which about 65 percent of Florida homeowners have, you are required to have an A-rated insurance company," Friedlander said.

Many people will now have to turn to the state-regulated and operated option called Citizens Property Insurance Corporation.

The problem with that is, Friedlander said, Citizens already has about one million customers before factoring in the new customers that will likely be coming from the downgraded insurance companies.

Friedlander also said Citizens, however, will pay out peoples' claims no matter what, but it could cost them.

"That could put citizens in a position where they would need to deplete their reserves to pay claims," he said.

Friedlander said people would have to pay for the claims, even if the person is not a homeowner.

"We will all get a surcharge on our insurance bill whether you’re a homeowner, a renter, a condo owner or even an auto owner. You have auto insurance in Florida, every single one of us will see multi-year surcharges on our bills to replenish the funds used by Citizens."

Friedlander said that Citizens currently has $6.7 billion in reserves, and $11.3 billion in claims paying ability.

He said if someone's company is one of the 27 that is potentially being downgraded, then they should immediately seek out an expert to help them navigate the current market.

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