Spiking insurance rates prompts suit against Citizens

By , Herald-Tribune
/ Tuesday, February 7, 2012

TALLAHASSEE

Joe Freitas bought his home for $109,000 in September and budgeted $917 for annual insurance costs, so he was upset when Citizens Insurance Corp required $236,000 worth of home insurance at an annual rate of $1,846.

Freitas thought Citizens had made a mistake. He hired an independent home appraiser who confirmed that Citizens had overestimated his replacement cost by $100,000. But the company would not budge.

So on Tuesday Freitas, 44, joined another homeowner from New Port Richey in a class action lawsuit against Florida’s state-owned insurance company.

Freitas’ lawsuit accuses Citizens of inflating home values to collect excessive premiums without applying for a rate increase.

“We spent over a year looking at a home and tried to be responsible so we wouldn’t be in a position where we couldn’t manage our budget and unfortunately (Citizens) pretty much forced us into that position,” Freitas said.

Consumer advocates linked the appraisal dispute Tuesday to a broader push by state lawmakers and Gov. Rick Scott to force homeowners out of Citizens by raising rates and limiting coverage.

“It’s a shameless way for Citizens to get premium increases without having to go through the proper process,” said Sen. Mike Fasano, R-New Port Richey, who gathered outside the Historic Capitol building Tuesday with homeowners, attorneys and a representative from the Florida Association for Insurance Reform to announce the lawsuit.

Filed in Pasco County, the suit names Citizens, Florida’s largest insurer with 1.5 million policies, and the company that makes the 360Value appraisal software as defendants.

“What they’ve done is a massive tax increase, back door tax increase, by raising rates,” said David Welch with FAIR.

Freitas said the large increase in his monthly insurance payments will hurt his standard of living.

“It’s certainly going to change the way we have to live our life,” he said. “I probably can’t take my wife to dinner. I can’t do the things we would normally want to be able to do.”

Citizens’ spokeswoman Christine Ashburn told the Associated Press the insurer’s goal is to establish an accurate replacement cost valuation to protect its policyholders and make sure they can restore their home after a catastrophic loss.

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Zac Anderson

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Last modified: February 7, 2012
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VIEWING 14 COMMENTS
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Marybelle
Tuesday, February 7, 2012 at 4:09 pm

The State of FL allowed Citizens Insurance to raise their rates. Governor Rick Scott will never be elected again.

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Scott Heimberg
Tuesday, February 7, 2012 at 4:59 pm

Your left leaning news articles are a microcosm for everything that is wrong with this country!

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Kevin Roth
Tuesday, February 7, 2012 at 8:26 pm

Now Citizens wont cover my porch, car port..etc?? WHEN WILL THIS INSANITY STOP? Why are people not yelling and screaming? When the next storm comes, and YOU the owner have to pay thousands of dollars to replace it after paying into this ‘state run’ program…will you then scream??? March???
I am amazed that people say ‘well, you cant fight city hall’.. Look what they did with breast cancer last week. WAKE UP!! CALL, WRITE, MARCH…its YOUR money

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alan
Tuesday, February 7, 2012 at 8:50 pm

i just quoted the property in question, and the insured has obviously not been told about a wind loss mitigation.

citizen’s is the best deal going price wise in new port richey- with a wind loss mitigation the property should be in the $1200 range. i got $209,000 for replacement cost.

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Brian
Tuesday, February 7, 2012 at 9:54 pm

Considering they only cover wind for many people – it is a substantial cost to pay. My brother-in-law lives in an area of the south which is hit by tornados, severe storms and flooding. he pays about 1/4 of the cost I do for a home valued at twice as much. And yes, he deals with tropical storms and depressons. He also has had two claims in the last ten years so again I blame the legislation and the lack of outcry from the citizens of Florida. Considering the lower wage earners and retiress which inhabit the state – you would think thee would be more accountability to protect those people but not when you have crooks in office. When a storm has not struck in years, there is still this outcry for more and more money. BS! In the last ten years I have shelled out over 15,000 in wind premiums alone and it is really just a gamble.

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Marybelle
Tuesday, February 7, 2012 at 11:00 pm

We had it nice with State Farm Insurance. Tallahassee decided they didn’t want State Farm anymore so we had no choice but to use Citizens. They are higher than a kite. Also Charlotte County is the worst County in the State. Port Charlotte has the worst Police Dept. They are lazy and are not doing their jobs. They overlook drunken drivers and give them a pass. I am beginning to think FL is a backwards state. I believe I am correct on this. This state is overrun with seniors and not a state for younger people. There is no industry here in FL to find work. We are here 24 years and it has really changed and not for the better. Communities have crooked Board of Directors and it stems all the way to Tallahassee and on to Washington. Terrible.

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Brian Griffin
Wednesday, February 8, 2012 at 12:58 am

I got quoted based an absurd replacement cost in 2006.

Most of my younger neighbors work construction. I’m sure something will get worked out if a storm hits.

I’ve saved $15,000 over the years after dropping insurance.

I don’t smoke, never fry food and always turn the electricity off when I leave the house.

I live in a neighborhood without covenants and could live in a shack.

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jay
Wednesday, February 8, 2012 at 8:47 am

whats wrong with citizens For a decade we had our insurance raised by private insurance companys that would either force tou to buy more insurance than you needed or they would drop you! where the helk was tallahasse then? I think they dont want citizens because THERE IS NO MONEY IN IT FOR THEM!!!!

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alan
Wednesday, February 8, 2012 at 10:16 am

the title of this article- spiking insuramce rates- shows this author has no idea whats going on out there. if the rates were spiking, believe me, they wouldnt be taking on 4000 policies a month last year. the problem is that they are too cheap. and nearly every poster here has said something incorrect about citizens.

again, this guy’s agent is the problem. one wind loss mitigation and his rate is down $400-$500 a year.

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Brian
Wednesday, February 8, 2012 at 12:04 pm

What is wrong with people? Everyone wants to buy a house and then dictate the cost of owning that house. When the cost of owning that house is different from their misguided expectations they whine and cry and sue? Citizens is a horrible company! Their rates are artificially low. isnt this guys problem evidence enough that they are very consumer friendly? You don’t have to have insurance if you don’t want it. If you want it you pay the cost determined by the seller. You can’t sue Publix for selling milk higher than you want to pay for it. All you people crying about premiums being too high, and joining the mob when you forced all the good companies out are to blame! State Farm, Allstate, Nationwide, Travelers were all forced out of the state because no one wanted to pay thier premiums so now all we have are these shady fly by night companies and Citizens. Good job people of Florida. This is a perfect example of government run insurance gone bad.

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Brian G
Wednesday, February 8, 2012 at 3:29 pm

Sooner or later most of us will chose to gamble..After you pay the higher hurricane mitigation costs if indeed a hurricane does strike, how much does one stand to lose, if they have a claim..EX.2500 for hurricane deductable..So how much damage can a hurricane do to a single story block house? Anyways..you figure 8000 for a new roof minus 2500 hur. mit gation deduct. Ins co only pays out 5500..You can recover that in a 2/3 yrs of premiums. I do have a seperate flood policy..

Of course many do not have a no insurance option as they have mortgages… I dont, so I am getting close to only having theft/fire and a flood policy… Just food for thought..I just may do it if my policy premium continues to go up yr after yr with no claims or no legitimate reason for the increases….

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Joe The Builder
Thursday, February 9, 2012 at 9:54 am

Most older homes would sustain heavy damage if a heavy wind event was to take place.
Have your homes inspected by a licensed company
Get any improvements required to bring the home up to current codes

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Primos Pal
Thursday, February 9, 2012 at 9:59 am

Hey Tommy how’s everything at the” tennnni fly”….diner
They got that TURKEEE special tonight

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Sunshine
Friday, February 10, 2012 at 10:51 am

Citizens are absolutely overstating the replacement cost of the homes. On top of that, if you your home is over 50 years old and is located on the keys, Citizens is your ONLY option for both home and wind insurance, at least that what we were told on multiple occasions by difference insurance agents. If your home was build or improved more recently, still Citizens is the ONLY option for the Wind insurance (which is the major chunk anyways)…. So the only choice is to let the bank take out insurance (which is not really an option as bank insurance is always ridiculously high) or take what Citizens throws at you. Therefore, lot of people on Florida keys are forced into Citizens as it is the only option! So where is freedom of choice?