What is Florida's "20% rule" for Citizens Insurance? The 20% rule keeps a property from staying on (or joining) state-run Citizens Insurance when a comparable private policy is available for no more than 20% more, a sign of how Florida's insurance market is normalizing in 2026.
For more than a decade, Citizens Property Insurance stopped being just Florida's "insurer of last resort" and became, in practice, the state's largest residential insurer. That started shifting visibly in 2026: active policies fell from roughly 1.4 million in 2023 to about 270,000 by September 2026, according to data cited by the Pozek Group in its Orlando homebuyer insurance guide. For anyone evaluating a Florida purchase, or already holding property here, understanding what is driving that drop, and what it means for the budget, is now part of basic financial planning.
From Insurer of Last Resort to a Shrinking Fallback
Citizens was created to cover properties that private insurers declined, usually because of hurricane risk or coastal location. During Florida's years of insurance market instability, many private carriers scaled back or left the state entirely, and Citizens absorbed that demand, growing past 1.4 million policies by 2023.
The drop to roughly 270,000 policies by September 2026 reflects the reverse trend: private insurers are competing for these properties again, drawn back by regulatory reforms and a more stable reinsurance market. That is generally good news for buyers, since more competition tends to mean more coverage options, but it also means a homeowner can be moved off Citizens and onto a private carrier without asking for it.
How the 20% Rule Works
The so-called "20% rule" is the mechanism governing that migration: if a comparable private policy exists with a premium no more than 20% higher than the Citizens rate, the property cannot stay on (or join) Citizens. It is routed to the private offer instead. In practice, that means a homeowner cannot count on landing a Citizens policy simply because it historically carried lower premiums.
For anyone buying now, the practical takeaway is this: do not assume Citizens coverage will be available or cheapest. It is increasingly common for the available coverage to already come from a private carrier, and that premium is what should go into your total cost-of-ownership calculation.
The 2.6% Average Rate Increase for 2026: What It Means for Your Budget
Alongside the shift in its policy base, Citizens also carries a recommended average rate increase of 2.6% for 2026, a far more moderate figure than the double-digit increases seen in earlier years of the state's insurance crisis. That does not mean insurance got cheap: it means the upward trajectory is slowing, which is a meaningful data point for anyone projecting a property's ownership costs over the next few years.
What This Means for Florida Buyers and Investors
For international buyers, homeowners insurance is one of the ownership costs that tends to be underestimated when building a budget, alongside property tax and, in condos, the HOA fee. Florida's recently approved Amendment 3 already brought meaningful changes on the property tax side for new residents; insurance is the other major piece of that recurring cost equation.
This insurance market normalization also lines up with the broader pattern of stable local tax rates seen in some areas, such as Orange County, which has held the same property tax rate since 2008. Anyone evaluating an investment purchase should treat insurance, property tax, and HOA fees as a single net return calculation rather than isolated line items, a point that becomes even clearer when weighed against regional growth indicators like those covered in our analysis of Dr. Phillips and Orlando's 2026 growth.
Frequently Asked Questions
Can a foreign buyer get homeowners insurance in Florida without restrictions?
Yes. A buyer's nationality or residency status does not prevent them from obtaining homeowners insurance in Florida. Pricing and availability are determined by the property's risk profile: roof age, construction materials, distance from the coast, and the area's claims history.
Is homeowners insurance required in Florida?
There is no state law requiring every property owner to carry homeowners insurance, but any lender financing the property will require an active policy for the life of the loan. In condominiums, the association is also required to carry a master policy on common areas, and that cost is shared among unit owners.
How does insurance cost affect the return on a Florida real estate investment?
Insurance is a recurring carrying cost, alongside property tax and, for condos, the HOA fee. It should factor into the net cash flow of any investment analysis, especially for rental properties, where annual insurance cost varies widely by region and property type.
