Class-Action Against State-Run Citizens Insurance

Insurance customers of Florida’s state-run Citizens Property Insurance Corp. have filed a class-action lawsuit in Broward County to stop their reinspection program, according to news reports. The policyholders claim they’ve been hit with potentially hundreds of millions of dollars in what they call “back-door” rate increases. They claim Citizens managed to do this by performing what the plaintiffs say were arbitrary reinspections of their properties and then hitting the policyholders with higher windstorm premiums.

As a Florida property insurance attorney, I have seen the many ways insurance companies have attempted to squeeze more money out of their customers. This class action lawsuit from fed up customers claims that the reinspection program illegally deprived homeowners of discounts earned under a 2007 inspection program, which was approved by the Florida legislature. The policyholders claim they submitted the official inspection forms under the law, but that Citizens pursued this reinspection policy anyway in an attempt to boost revenue because it was unlawful to officially raise premiums. Even worse, they claim that the inspectors came to their properties and didn’t even look thoroughly for evidence of the necessary improvements and often quickly ruled that homeowners didn’t qualify for the credits or discounts, reinforcing the idea that the whole scheme was to make money for Citizens and not to honestly check for the necessary home improvements.Through this program, three out of four homes lost their discounts and, on average, had to pay 30 percent more for insurance because of it. The policyholders and consumer advocate groups across the state accuse Citizens of slyly instituting de facto massive rate increases through this program. One nonprofit, Florida Association for Insurance Reform, said, “Since at least 2010, Citizens has used a wind mitigation reinspection program to systematically deprive policyholders of legitimate wind mitigation credits.”

Media reports have stated that Citizens earned as much as $137 million from their incredibly unpopular reinspection program. Due to outrage, Citizens has stated it is reforming (but not eliminating) this policy by allowing those who lose insurance credits and discounts due to reinspection to have yet another inspection free of charge. Citizens will also provide more information to property owners about what is needed to prepare for an inspection and new methods to challenge the results of an unfavorable reinspection. Citizens has not made a decision about whether these new procedures will also apply retroactively to those already caught by the reinspection program.

If you are feeling cheated by your insurance company using unfair practices causing you to pay more or to deny you the coverage or benefits you paid for, contact a local insurance attorney to learn about your options. If you proceed with a case, under Florida law, if you succeed, the attorney’s fees will automatically be the responsibility of the insurance company. This means that no matter how big or small your claim, if you win your case, you get to keep the entire award and the insurance company will pay all of your lawyer’s fees.

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