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Citing water losses, Florida insurer approves rate hikes

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Florida’s state-created property insurer, contending that it is dealing with a flood of suspicious water-related claims and lawsuits, is asking state regulators to raise rates for thousands of homeowners next year, including those in the most heavily-populated areas.

The board that oversees Citizens Property Insurance voted unanimously Tuesday to raise homeowner rates an average 5.3 percent and commercial accounts by an 8.4 percent average.

Citizens has more than 451,000 customers, many of them living near the coast or in South Florida. The corporation was created by state legislators to act as the state’s insurer of last resort when Floridians cannot get coverage from private companies.

The proposed rate hikes vary by the type of policy purchased and location, but the rate hikes will fall hardest of homeowners in Palm Beach, Broward and Miami-Dade counties who will pay as much as 10 percent more a year. Residents in other coastal counties such as Collier, Santa Rosa and Pinellas, however, will see their rates go down.

Citizens officials assert they have to raise the rates to cover rising costs associated with water damage claims that are not connected to weather events such as hurricanes or tropical storms. Florida has avoided major damage from hurricanes for more than a decade.

Citizens is also putting in place other programs, including putting a limit on how many water damage claims homeowners can file over a three year period and a $10,000 cap on how much the company it will reimburse homeowners for water-damage repairs. A homeowner, however, can avoid the cap if they agree to participate in a new Citizens-run program that links them to specific contractors.

“These proposed rate increases and product changes are critical for Citizens’ efforts to bring some relief to a market that is being made increasingly expensive by unnecessary litigation and out-of-control water loss claims,” said Chris Gardner, chairman of the Citizens board. “Unfortunately, we are making it more expensive for many of our customers to own a home.”

Citizens and others in the insurance industry have pushed for legislators to change state law regarding the ability of homeowners to sign over insurance benefits to contractors who do home repairs. They say this practice results in lawsuits and that the work is sometimes done before adjusters can inspect the damage.

While some in Florida’s business community have suggested these rising claims are fraudulent, Citizens officials and top regulators have stopped short of backing up those accusations.

The Florida Legislature wrapped up its session this year without passing the bill to deal with these “assignment of benefits” that was being pushed by the insurance industry. Some senators including Sen. Gary Farmer, an attorney from Fort Lauderdale, have said the water-damage related lawsuits have been driven by Citizens practice of refusing to pay legitimate claims quickly.

Republished with permission of The Associated Press.

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