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Some Homeowners Insurance Companies in Florida Deny Mitigation Discounts

By Mike Heuer

Hurricane threats are one of the biggest problems for the homeowners insurance companies Florida residents rely upon for their home insurance coverage, but the state-backed entity that underwrites coverage for the most homes might have started a trend that could prove costly for homeowners in the Sunshine State.

Officials for the Citizens Insurance Corp. have been denying discounts for homeowners who initiate hurricane mitigation steps to reduce the likelihood of damages and destruction from hurricanes and tropical storms that so often strike the vulnerable state. The Citizens homeowners insurance company in 2012 began inspecting homes for which owners have filed requests for rate discounts based upon mitigation efforts. Nearly 300,000 homes have been checked by Citizens homeowners insurance inspectors with about 75 percent of inspections resulting in increased rates.

The average rate increase has been nearly $600 per year on homeowners insurance plans with the most frequent reason cited for denying discounts being errors in filing the forms for obtaining discounts. In some cases, the inspectors say the mitigation efforts either were not done properly or were not done at all.

While most homes had their rates increased, about 18 percent had their Citizens homeowners insurance premiums remain the same while about 7 percent had them lowered as a result of the inspections. Citizens homeowners insurance plans provide coverage for about 1.4 million homes in Florida, making the state-run insurance entity the largest underwriting of homeowners insurance in the Sunshine State.

State officials created Citizens in 2002 with the intention of it being an insurer of last resort and to spur competition among homeowners insurance companies in Florida. But the actual effect has been to drive some property and casualty insurers out of the state. The largest private insurer, State Farm, recently announced plans to stop providing homeowners insurance in the state, but Florida insurance officials intervened and convinced State Farm to continue underwriting homeowners insurance in the state while allowing the insurer to transfer tens of thousands of home insurance policies to other insurers.

While many homeowners in Florida have been struggling to obtain discounts on home insurance due to their mitigation efforts to limit potential hurricane damages, state officials are cautioning them to be wary of one of the more common methods of limiting possible glass breakage.

Applying film covers to windows is a common hurricane mitigation practice as it can make windows more durable and reduce the amount of glass breakage. But companies claiming doing so will result in lower home insurance rates are engaging in deceptive practices, according to Florida Attorney General Pam Bondi.

“The Florida Building Commission has not approved window film as a form of hurricane protection; therefore, it cannot be advertised as offering hurricane protection,” Bondi said. “Anyone who advertises, sells, offers, provides, distributes or markets a product as hurricane, windstorm, or impact protection from wind-borne debris without such approval is in violation of the Florida Deceptive and Unfair Trade Practices Act.”

At least eight companies have settled with the state regarding the legal issue, and more are being investigated, Bondi said.