Citizens Raised Insurance Based On False Report, Lawsuit Claims

A Palm Beach County homeowner filed a lawsuit Tuesday alleging the state’s property insurer of last resort revoked her insurance discounts — and raised her premium — based on a false report.

In the ongoing controversy over how Citizens Property Insurance Corp. handles its home reinspection program, Stephanie Ritchie accuses Mueller Services of improperly flagging problems with her roof and garage door, among other issues.

“I was very upset,” said Ritchie 43, of Tequesta, who saw a premium increase of $1,771. “It was a big burden. What makes me so upset is that I had everything to get the discounts.”

Ritchie’s suit, which seeks class-action status, claims that Mueller did not pay inspectors until they determined that a homeowner did not qualify for the discounts “despite the inspector’s independent judgement that the homeowner was entitiled” to them.

Citizens was not listed as a defendant, though a Pembroke Pines man filed a similar suit against the state insurer earlier this year.

Officials from Mueller and Citizens could not be reached for comment Tuesday. Citizens issued a brief statement, saying it is not a defendant in the Ritchie lawsuit, which was filed in U.S District Court in West Palm Beach.

Both suits say Citizens is trying to make up for lost revenue because of state-mandated discounts and capped insurance rates.

Citizens has a surplus of more than $6 billion but says it may not have enough money to pay claims after a major hurricane. The insurer has raised rates and reduced coverage, hoping to push some of its 1.4 million policyholders into the private market.

But many customers say they have no other options for insurance.

“Citizens is only focused on numbers and raising rates, not real people,” Sean Shaw, founder of Policyholders of Florida, said in a statement. “One year they tell policyholders to harden their homes to reduce rates, now they want to change the rules in the middle of the game.”

Citizens’ reinspection program, started in 2010, was designed to reward homeowners for bolstering their homes against storm damage by upgrading roofs, doors and windows. But it has faced increasing scrutiny because customers have lost discounts as a result of a reinspection and saw their premiums rise sharply.

A few local homeowners have disputed claims made on Mueller Services’ inspection reports.

Sandy Teich said the company reinspected her Coconut Creek home in late 2011, just two years after the original inspection. She said Citizens raised her premium from $3,700 to $4,565. Teich said the report misstated the way her roof is attached to her home and said that her front door was not hurricane safe because painters had painted over a sticker saying it was. She had documents proving it, but said the inspector didn’t want to see them.

“What they were telling me, the reasons they were giving me for raising my rates, were not justified,” Teich said. “I’m not an insurance agent, but I have a pretty hurricane-safe house, and it does not make sense for me to have to pay $4,500 a year.”

She said Citizens refunded her more than $500 she had already paid toward the higher premiums. She said they offered her a new rate that, while still higher than the rate she had before the reinspection, was lower than $4,565. But Teich switched to Universal Property and Casualty instead.

Weston Homeowner Linda Buczyner also said she found problems with her reinspection: The garage photographed in the report was someone else’s, and the photos of her attic didn’t seem to actually show anything important about her roof attachment, Buczyner said. She challenged the report and Citizens sent a third inspector, Buczyner said. and refunded her $780.

“It scares me, because I was smart enough and had enough time to look at my report,” Buczyner said. “Not everyone is. And if this woman who did my inspection got that stuff wrong on mine, how many other people did she do that to?”

Because of the outcry, Citizens announced last month that it is revamping the program, giving homeowners who lost discounts an opportunity to have another inspection, paid for by Citizens. The insurer said it also will give homeowners more avenues for disputing the results.

But Brian Smith, Ritchie’s attorney, said the changes don’t go far enough.

“I have not heard that Citizens will refund all the money they’ve overcharged homeowners through the removal of their credits,” he said.

In the suit, Ritchie says she received the discounts after a 2011 inspection that was supposed to be good for five years.

But she lost the credits after a May reinspection by Mueller, the suit says. The report improperly noted, among other things, that the roof failed to meet Florida building code requirements and that the garage door was unrated for impact resistance, the suit alleges.

Ritchie did not make any material changes to the home or file a claim between the two inspections, the suit says.

More than 100,000 Florida homes reinspected by Citizens have lost windstorm discounts, resulting in average premium increases of $600 a year, according to data released by the insurer in May.

At the time, Citizens said it offers $1 billion annually in credits for shutters and other windstorm protections. But it started cutting back after learning of “significant” errors on the forms submitted by homeowners. The required documentation can be confusing, and the insurer isn’t accusing homeowners of lying to get the credits, a Citizens spokeswoman said in May.

In February, Pembroke Pines’ Keith Babbitt filed suit against Citizens over the lost discounts. After having an inspection and getting a discount, Kenneth Babbitt received a letter from Citizens, which required another inspection, the suit says. The insurer removed discounts as a result of the inspection and added $253 to his $1,029 annual premium, according to the suit, which also seeks class-action status.

The suit was moved from Broward to Leon County, where Citizens is based. The insurer has filed a motion to dismiss, which is expected to be heard in November, said Gregory Weiss, Babbitt’s lawyer.

The suit filed Tuesday alleges an inspection company prepared a report that made the following false statements:

  • The roof failed to meet Florida building code requirements.
  • The roof-to-wall attachments were “toe nails.”
  • The garage door was unrated for impact resistance.
  • The storm shutters did not have an impact rating.
  • The reinspection findings were inconsistent with the inspection findings.

Citizens will review information such as as roofing permits, work invoices or sales receipts from policyholders who feel legitimate discounts were revoked. Policyholders should submit such information to their agents.

Source: Sun-Sentinel

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