Tuesday, January 3, 2012

Citizens Property Ins. raising costs by looking at details

Posted for www.miamiforrussia.com
TALLAHASSEE, Fla. – Jan. 3, 2012 – Florida-owned Citizens Property Insurance can increase its rates no more than 10 percent per year, but the company has two options that allow it to raise rates without impacting that cap: nixing discounts some homeowners receive for hurricane mitigation efforts and increasing a home’s replacement cost in the premium calculation.

Hurricane mitigation discounts

Florida homeowners get a property insurance discount if their home has added features that help lower potential damage from a storm. To receive the discounts, homes must first be inspected, and a number of policyholders have done so. However, Citizens claims that the original inspections have listed hurricane mitigation upgrades that don’t exist, and many homeowners don’t deserve the discount.

As a result, Citizens is reinspecting homes, and, according to the Palm Beach Post, only about one in three homeowners keeps a hurricane mitigation discount after the reinspection. About 78,000 Florida homeowners have been reinspected so far, and the ones that lose a discount end up paying about 24 percent more – an additional average of $717 per year. Up to 200,000 total homes are slated for reinspection before the end of 2012.

Replacement costs

Even though home values have decreased, many owners have watched their replacement cost – the amount it would take to rebuild a destroyed home following a disaster – increase. And as the replacement cost increases, the cost of property insurance increases. For some policyholders, their home’s replacement cost is double its value in today’s market.

Citizens says it used a private vendor, 360Value, to calculate replacement costs. However, Citizens says it will reevaluate the calculations for South Florida and Tampa homeowners this month.

“In light of publicly expressed concerns about some of the replacement cost valuations generated by 360Value, Citizens will supplement its normal contract monitoring to include a targeted review to validate the accuracy of 360Value outputs,” Citizens said in a release.

Source: Palm Beach Post, Dec. 22, 2011, Charles Elmore

© 2012 Florida Realtors®

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