If you are a South Florida homeowner, you’re likely in the state’s Citizens Insurance program. If you are, you should be aware of an exclusive CBS4 Investigation that found hundreds of thousands of policyholders might have been overcharged by the state-run company.
Some Insurance Industry insiders believe the consumer losses could be in the millions of dollars, with South Florida being ground zero for a statewide problem.
Private insurance adjuster Belen Valladares said she has been seeing Citizens Insurance manipulating insurance premiums using popular insurance industry software.
“The consumer is the loser for sure and the winner is definitely the insurance company because they are manipulating everything,” Valladares insists.
South Miami-Dade homeowner Mindy Cohen wonders if that is why her insurance bills almost doubled over the past few years.
“Right now, it’s pretty difficult to make ends meet to pay the insurance bills,” she said. “It went up $4,000. I’m not very happy about it. Nothing is being done about it. They’re still getting away with it.”
And she is not alone in her complaints about growing insurance premiums. Rates for the state’s biggest insurer have been rising for years.
Our CBS4 News investigation has raised serious questions whether homeowners’ insurance bills for possibly hundreds of thousands of South Florida residents may have been intentionally over-inflated.
The possible cause is Citizens’ repair estimating software.
So, what is repair estimator software and why should we care? It’s a computer software program that insurance companies use to figure out the repair costs on homes in event a storm strikes and major damage results.
So why should you care? Simple. The bigger the estimate that comes out of the computer program, the bigger your insurance bills will be.
According to a pending class action lawsuit, Citizens’ software “can be manipulated to artificially inflate the replacement cost of a home.” That’s exactly what Valladares said has been driving up our insurance bills, adding, “I think they have manipulated the price lists, and manipulated the depreciations.”
Dulce Suarez Resnick is a long-time Miami insurance agent who thought something was wrong with her Citizens’ insurance quote. It recently came back much higher than several other private companies. She believes she was overcharged.
“In my case I had three different costtimators done from three different types of software,” she explained. “My house’s replacement cost ranged from $364,000 through $519,000. If you’re paying $3,000 for $364,000 worth of coverage, then you’re going to pay $4,900 or $5,000 for $519,000 worth of coverage.
I asked what that mean in simple language? ”
It’s a big difference in your premium,” Suarez-Resnick said.
Citizens reportedly modified its software last October following the lawsuit alleging it intentionally drove up customers’ bills.
Nevertheless, State Rep. Frank Artiles, a longtime critic of Citizens Insurance, believes it was intentional.
“Yes, they were overcharged,” he said. “And I believe that the cost to consumers is in the millions of dollars, especially here in South Florida.”
Were we ripped off? “Absolutely, positively, 100 percent yes,” Artiles answered.
And where does he think most of the victims were?
“From West Palm Beach down…We are ground zero.”
Last year, state lawmakers passed a new law allowing homeowners to submit independent repair estimates in an effort to help them get more accurate estimates and possibly lower their insurance bills. Still, some critics say Citizens is not passing that information along to its customers or agents.
“I don’t think that information has trickled down and I truly believe that Citizens does not tell its customers or their agents,” Artiles maintained. “It could mean a savings of millions of dollars throughout South Florida.”
Homeowner Cohen said she’s not surprised.
“It means we’re all screwed, because we need them,” Cohen said. “We need insurance; we have to have insurance and we’re screwed.”
Citizens officials declined comment on the pending class action lawsuit. The software company Citizens uses to estimate rebuilding costs originally was named in the lawsuit, but has since been dismissed from the case. That company also declined to comment on the lawsuit against Citizens.
Citizens successfully argued the trial needed to be moved from Pinellas County to Tallahassee, and the court agreed. It’s expected to ask that the entire case be dismissed.
In the meantime, homeowners can ask their agents for new rebuilding cost estimates when it comes time to renew their insurance policies. And if you don’t like what the software reports, try another company with a different software program. You may be able to save big bucks off your next bill.
For more information, go to: www.miami.cbslocal.com/2013/02/28/citizens-target-of-lawsuit-alleging-overcharging/.
Watch Al Sunshine’s “4 Money Watch” reports Monday-Friday. You may find Al’s blog at cbsmiami.com.