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Nov 22, 2009 1:05 pm US/Eastern
Insurers Looking To Adjust Windstorm Discounts
TALLAHASSEE (CBS4) ―
Homeowners who shelled out big bucks to storm proof their home with shutters, impact resistant windows and other measures to qualify for a big discount on their insurance may soon see that discount shrink, or vanish all-together.
Nearly a dozen insurance companies across the state are sending out inspectors to ensure that homeowners who are receiving the discounts truly earned them. In many cases they have not, say the insurers, due to previous faulty or fraudulent inspections, according to
CBS4 news partner
The Miami Herald.
Up until this past summer, inspections to certify that homes had beefed up to withstand high winds were paid for by either a state program or the homeowner. Insurance companies say they believe some inspectors promised the homeowners they would be able to save them more than enough to cover the cost of the inspection and then falsified their report to do so. This latest round of inspections is being paid for by the insurance companies themselves who say they just want to make sure the discounts they are giving out are deserved.
``We are required by law to give the discounts,'' said Lockwood Burt, chief executive officer of Security First Insurance told the Miami Herald. ``The problem is that we might be giving discounts to people who aren't entitled to them.''
Burt said his company has reviewed 500 policies with discounts and mistakes were found in nearly 60 percent of them. Homeowners who did not qualify for the full discount are now paying on $302 in premiums. On the other hand, Burt was quick to point out, one tenth of discounted properties resulted in the homeowner getting a larger discount -- $140 on average.
According to a state mandate, insurance companies must offer the discounts which became very popular when insurance rates skyrocketed after the busy 2004 and 2005 hurricane seasons. In 2006, the discounts were double on the theory that at a fortified property would be good for both the property owner and the insurer. But the discounts began to cut into the insurance companies bottom line as more and more property owners qualified for them. Insurance companies have asked the state to adjust the amount of discount they have to allow, but so far the state has said no. In order to cut giving the wind mitigation discounts, the insurer would have to get permission from the state.
Since the insurance companies can't cut or adjust the discount rate, some property owners say they are doing the reinspections in an effort to find something wrong which would allow them to disallow part or all of the discount - which would to bump up their bottom line.
So far Citizens Property Insurance, the largest insurer in the state, hasn't reinspected any of its policyholders' properties as of yet. They plan to start next month with a test review of 500 policies to see if there are any widespread problems with the initial inspections. If mistakes are found, Citizens says premiums will not be adjusted until the policies come up for renewal.
(© MMIX CBS Television Stations. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. CBS4 news partner The Miami Herald contributed material for this report)
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