First it was a homeowner insurance crisis, then it extended to business owners. Now even builders are feeling the pinch.

Citizen's Property Insurance Corp., the state's homeowner insurer of last resort, has scheduled an emergency meeting this morning to determine whether to rescind June's vote that ended residential and commercial construction insurance coverage.

When Citizens' board decided to stop offering the coverage, known as "builder's risk" insurance, it was unaware of a severe availability problem, Citizens Board Chairman Bruce Douglas said.

Builders say if the original vote stands, some construction projects could be halted midstream and others might not get off the ground because of the difficulty in finding coverage.

"Banks won't lend the money to builders if they don't have insurance," said Doug Buck, director of government affairs for the Tallahassee-based Florida Home Builders Association. The problem has been particularly acute in coastal areas, he said, where the private market for coverage has dried up.

Douglas said he recommended the Citizens board rescind their original vote. "We fully understand the gravity of the situation, " he said.

Last week, Florida Chief Financial Officer Tom Gallagher wrote Douglas urging the insurer to scrap its ban on builders risk coverage because there was no viable private market.

Citizens stopped writing new builders risk policies Saturday and is set to start canceling policies Nov. 1.

Citizens' decision to drop coverage for builders came after the state's Office of Insurance Regulation asked the insurer to justify why it offered coverage for builders. Although Citizens has only 6,000 such policies, they amount to more than $4 billion of risk coverage.

Losses for Citizens, which was created in 2002 to cover homeowners who couldn't find insurance in the private market, totaled more than $2 billion during the past two hurricane seasons. It is unclear how much of that damage was due to builders risk coverage.

In scrapping the coverage, Citizens' board determined that the state law creating the insurer did not require it offer the builders policies.

Although Citizens may start offering the coverage again, the rates could rise in the future as Citizens determines whether premiums accurately reflect the risk, said Rocky Scott, a spokesman for Citizens.

Rates have not risen in several decades, Scott said. He said the coverage costs been a $1 and $2 per thousand of insured value.

Reporter Randy Diamond can be reached at (813)-259-8144 or rdiamond@tampatrib.com.