Thousands of Florida homeowners buffeted by higher windstorm premiums have sued state-run Citizens Property Insurance Corp. to recover potentially hundreds of millions of dollars in “back-door” rate increases driven by “arbitrary” reinspections of their residences.
The proposed class-action lawsuit, filed in Broward Circuit Wednesday, aims to halt Citizens’ reinspection program, claiming it has illegally stripped discounts from homeowners who had earned them under a 2007 inspection program approved by the Florida Legislature. Their original inspections were supposed to be valid for five years.
But in 2010, Citizens violated the due-process rights of homeowners, who had submitted official inspection forms, by arbitrarily reinspecting their properties to boost lost revenue that the agency could not generate lawfully through premium hikes, the suit said.
Lawyers who filed the suit, whose class representative is a Broward homeowner, said Citizens violated the due-process rights of its policyholders, costing each higher premiums averaging upwards of $1,000 — and possibly more — a year.
The collective cost to homeowners throughout Florida exceeds more than $100 million, said attorney Todd Stabinksi, whose Miami law firm, Stabinksi & Funt, filed the suit with Farmer, Jaffe of Fort Lauderdale and Kula & Samson of Aventura. They gathered Thursday for a press conference outside the West Broward County Courthouse in Plantation.
“Citizens got the benefit of lowering their risks, but Citizens’ policyholders did not get the benefit of lower premiums,” Stabinski said. “It should have been a mutually beneficial bargain.”
Consumer advocates have accused Citizens of using the reinspection program to impose “massive” rate hikes on homeowners. Citizens has denied the charge, saying that it is simply trying to get accurate information about the homes it insures.
“Since at least 2010, Citizens has used a wind mitigation reinspection program to systemtically deprive policy holders of legitimate wind mitigation credits,” said a nonprofit group, Florida Association for Insurance Reform, which praised the legal action.
A spokesperson for Citizens said the company has been operating under the law, and that the reinspections came after regulators changed the mitigation criteria. “Our position is 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,” said spokesman Michael Peltier.
Discontent has been widespread among Citizens’ policyholders, who spent large sums of money on roof, window and other upgrades to earn windstorm mitigation discounts while protecting their homes against potential hurricane damage. In response, Citizens unveiled major changes to its home reinspection program last August, after consumers expressed outrage over media reports about a staggering $137 million in premium increases generated by the unpopular program.
Under its new plans, homeowners who lose insurance discounts because of a reinspection can receive a second inspection free of charge. They will have new tools to dispute the findings of the first reinspection. That decision could impact more than 200,000 property owners, who have already seen their premiums go up by an average of about $800 after the initial reinspection.