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Insurance crisis creates a state of confusion
Some homeowners are forced into Citizens, others are moved out of Citizens and few know their options.
Allstate canceled Kirby's homeowners policy Nov. 1 and recommended he switch to a company he'd never heard of: Royal Palm Insurance. Based in Ormond Beach, Royal Palm was founded in 2005 by former state Sen. Locke Burt as an alternative for homeowners dropped by Allstate. Royal Palm has about 125,000 policies statewide and uses Allstate agents to service its policies.
Kirby checked with Royal Palm, and with state-backed Citizens Property Insurance. He chose Citizens, saved himself about $400, and told Royal Palm no thanks.
This should be where everyone says goodbye and goes home.
But even though he had not signed a contract with Royal Palm, the company billed Kirby's mortgage company $2,893 and was paid in full. A week later, Citizens also billed the mortgage company and was also paid.
Two weeks ago, Kirby got a notice from his lender. Guess what? His escrow account was short nearly $3,000.
Royal Palm apologized, blamed the problem on growing pains, a change in state law and computer oversight, and promised to quickly refund Kirby's money. "A lot of these policies were caught in the transfer process," said Royal Palm spokesman Mark Riordan. "The agents were confused, the policyholders were confused."
Confusion seems to be a common theme lately.
Not to be confused with collusion, which is another common theme in insurance these days.
"When this came up, I knew the right people to call," Kirby said. "But what about the people who don't know what to do? How many people who have existing mortgages are getting the same letter I got and are just paying the shortage?"
That's an important point. Buying homeowners insurance used to be something people didn't think about. It was the extra $60 or $70 tacked on every month to the mortgage payment.
Not anymore.
