TALLAHASSEE -- The forms used by property insurers across the state to calculate insurance discounts for homeowners are seriously flawed and must be completely thrown out, an administrative judge has found in a potentially groundbreaking ruling.
The decision could have far-reaching implications for homeowners who receive wind-mitigation discounts for hurricane-proofing their homes — and specifically for those who lost discounts during a mass home re-inspection program by Citizens Property Insurance Corp.Because of a flawed study commissioned 10 years ago by the Office of Insurance Regulation, Florida homeowners may have been denied several million dollars in discounts for their garage doors.
“There are tens if not hundreds of thousands of people who are impacted by this,” said Jack Stumpff, a Plantation small business owner who successfully took on OIR in court and got the mitigation forms thrown out.
While the impact of the ruling could be widespread, no homeowner will see any changes any time soon because the legal battle is still playing out in court. OIR recently appealed the Oct. 19th ruling in circuit court, and is downplaying its potential impact.
“I don’t think that people need to be concerned that they have lost a substantial amount of discounts for this,” said Belinda Miller, the agency’s general counsel.
A spokesperson for Citizens said the insurer of 1.5 million would await the results of OIR’s appeal.
For the past several years, Florida homeowners have received billions of dollars in discounts on their property insurance bills for strengthening their homes against hurricanes.
Window shutters, hurricane-resistant roofs and impact-resistant glass doors are some of the improvements that have helped homeowners save hundreds — or thousands — of dollars on their insurance premiums. Insurance companies also benefit because homes with stronger features hold up better during hurricanes, leading to fewer claims.
Property insurers across the state use the same forms to help calculate the proper discounts for homeowners. Last month’s ruling by Administrative Law Judge Robert Meale found that the forms — written by OIR — are invalid because they failed to provide separate discounts for homes with wind-resistant garage doors. Those discounts are required by law.
Because discounts are dependent on each other, one flaw in the form can impact the size of every other discount. As a result, the judge nullified the entire mitigation form for all homes built before 2001, when the more comprehensive Florida Building Code was enacted.
“Due to the interdependency of loss relativities and discounts, these omissions and understatement also raise the real possibility of distortion among the other loss relativities and discounts,” wrote Meale, hinting that homeowners across the state may have received incomplete discounts in recent years.
Stumpff, who sells a garage-door strengthening product called “Secure Door,” said the lack of discounts for retrofitted garage doors has hurt his business. He filed a suit to get the discount forms changed.
“We did what we thought we had to do for our business and for all the homeowners out there who are not getting their discounts,” said Stumpff, whose product is sold at Lowe’s hardware stores for about $150. Installing the Secure Door product on an older garage door offers many of the same benefits as buying a new garage door, which can cost more than $1,000.