Citizens Property Insurance Corp. was always meant to be a Florida resident’s last, best hope for property insurance. When nobody else would cover your home or business, you could always go to Citizens for a policy. But these days, there are fewer firms than ever writing insurance policies in Florida, so the state’s so-called “insurer of last resort” has become the only insurance option for many homeowners – for others, it’s the preferable option because it offers coverage and rates competitive with those of private companies.

So when Citizens sent out letters to policyholders late last year notifying them that, as of 2012, the company would no longer be providing coverage for carports, screen rooms, patios, pool cages or awnings – valuable parts of a property that can amount to up to a third of the footprint of a typical home in Florida – some were alarmed. If you’re already with the insurer of last resort, which then drops your coverage, who’s going to cover you?

“I would like to know who is going to pay to have the debris these attachments will create removed from our streets after a catastrophic hurricane devastates Florida,” an anonymous home-owner and insurance agent wrote in a letter sent to media outlets throughout the state. “I would also like to know who will pay to rebuild the damaged portions of our homes the loss of these attachments will create in order to make our homes livable again.”

Citizens is a nonprofit, state-run insurance company established in 2002 to address the fact that private property insurers were fleeing the Florida market due to hurricane risk. The company picked up the slack as insurance companies departed over the years, and it’s now the state’s largest insurer, providing comprehensive coverage for nearly 1.5 million commercial and residential locations as of Dec. 31, 2011. For perspective, that’s about 300,000 more properties than it insured five years ago and almost double what it insured at this time in 2003. The company’s total liabilities (the amount it would have to pay out if every property it covered was destroyed, referred to in the industry as “exposure”), ballooned from $193 billion in 2003 to more than half a trillion dollars today.

According to Candace Bunker, a spokesperson for Citizens, such high levels of liability don’t mesh well with Gov. Rick Scott’s plans to “return Citizens into the insurer of last resort.” The governor wants to put Citizens back into what’s called the residual marketplace – in other words, reduce people’s reliance on it and urge them to choose private companies that offer comparable rates and products.

Now Citizens is changing how it assesses properties by redefining what “comprehensive” coverage actually is. The goal – which butts up against the original mission of Citizens – is to not only reduce the company’s overall liabilities but also to spur consumers to consider different insurers.

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