A lawsuit seeking class action status filed against the state-backed Citizens Property Insurance Corp. alleges the company purposefully deprived customers of windstorm mitigation discounts through an arbitrary reinspection program that lawyers estimate has cost customers nearly $200 million in lost credits.
Customers have complained for years about losing money under a Citizens program that promised wind mitigation credits to homeowners who added extra precautions, such as shutters, to their homes to protect against storm damage. Hundreds of thousands of customers spent money adding hurricane proof windows and fortifying their homes, then paid inspectors to come out and certify those changes in order to qualify for the credit. The credits were supposed to last for five years.
But less than five years later, Citizens changed the rules mid-game, embarking on a systematic reinspection campaign, sending out their own inspectors to homes and then revoking credits on technicalities, according to the lawsuit that was filed in South Florida federal court. A judge still has to grant class-action status.
The lawsuit estimate 226,000 customers have lost a total of roughly $190 million in credits since 2010 and alleges those changes were only made so Citizens could unjustly increase premiums. The average increase per household was around $800, attorneys said.
It has been a particularly heated issue in South Florida, where a large chunk of Citizens’ 1.3 million policyholders live.
“They have invested their own money in a reinspection program designed to strip away those discounts…some people pay more to Citizens than their mortgage company,” said plaintiff’s attorney Todd Stabinski.
“Citizens’ reinspections were conducted under statutory authority afforded any insurer to verify, at the insurer’s expense, the accuracy of inspection reports submitted for a mitigation discount,” Citizens’ spokesman Michael Peltier said.
Citizens responded to the outrage last fall, saying it would do a follow-up inspection at no charge to customers whose mitigation credits were removed because of inadequate attic access or those who disagreed with the original findings.
Any Citizens customer who made improvements can ask for a reinspection and have a credit retroactively awarded, but Citizens will not return any premiums retroactively.
Attorneys for the plaintiffs want Citizens to reinstate the credits, saying “it’s the only fair way to respond.”
As if on cue, Fort Lauderdale homeowner Heath Berke walked by the courthouse last Thursday where lawyers were holding a press conference and expressed his own frustration with the program in an impromptu tirade.
He said he was forced into a reinspection and wasn’t allowed to choose the inspector. That inspector said he couldn’t access Berke’s crawl space, so he took pictures from a distance then dinged Berke for failing to meet standards. Berke disputes the inspector’s findings, saying several things on the form weren’t true, but nevertheless his premiums skyrocketed.
“I just got my new inspection bill and I’m outraged,” said Berke, whose premiums jumped from $3,100 to $5,400.
Berke is among millions of other Florida homeowners and businesses whose property insurance rates keep soaring even though a hurricane hasn’t made a direct hit over the state in seven years.
The average Florida homeowner is paying twice as much for insurance than just six years ago, according to industry statistics. In some areas, the increases are much higher.
There is little competition in the Florida property insurance market because many consumers can buy from only one company — usually Citizens. Founded by the Legislature in 2002 for homeowners who could not get private policies, it remains the state’s largest property insurance company with nearly 1.3 million customers, after shedding some 160,000 policies in recent weeks to private companies.
Scott and the Legislature are eager for Citizens’ to reduce its overall liability, which would exceed its ability to pay off in the aftermath of a catastrophe.
Citizens has been in the cross-hairs of several investigations in recent months, including more embarrassments in an internal review released last week. The company’s investigators reviewed 474 cases dating back to 2008 that included employee complaints ranging from being unfairly terminated or demoted due to sexual harassment, sexual favoritism and violations of the company’s expense account policy.
“Where we found weaknesses, we are making necessary improvements,” said Joe Martins, Citizens’ chief of internal audit.
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