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New Rules for Hurricane Discounts


By James Call


Tallahassee, FL – If you spent money hardening your home to withstand hurricane force winds, you are still entitled to a discount when you pay your homeowner insurance. But you will need to do more paperwork. The Florida Cabinet has approved new rules to fight what the insurance industry calls fraud.

Hundreds of thousands of Floridians have spent thousands of dollars fortifying their homes over the past five years. The state encouraged the investment when six hurricanes tore across Florida in 2004 and 2005. It required insurance companies to offer a discount on premiums for strengthening roofs, installing shutters, and other improvements. The My Safe Florida Home program provided free inspections qualifying homeowners for the reduced rates. Now the industry says the program is costing it money. Sam Miller is Executive Vice President of the Florida Insurance Council.

"The mitigation discounts are very important to encourage folks to harden their homes. However, the fraud that's out there, we have to eliminate. One of the largest victims of this fraud has been Citizens Property Insurance."

Citizens is the state financed insurance company for homeowners when private companies won't underwrite a policy. It did a review of 452 homes and found that more than two-thirds of them were getting bigger discounts than they should.

"Criminals are very ambitious, and they'll find a way to commit fraud, and there's no way that a form can stop all of it. But our goal here is to make it easier to detect and harder to do."

Belinda Miller is Deputy Director of the Office of Insurance Regulation. She presented to the state Cabinet a proposal plugging the loopholes people have been exploiting. Glitches in the program came to the surface a couple of years ago when the state doubled the amount homeowners could get.

"We had one company, as I mentioned, come to us and say that they had an agency that used the same form and basically photocopied it for their business. They were suspicious because there aren't that many houses that have hit roofs, and there aren't that many houses that are built in the same year, etc. And so they checked and they found out that the agency was basically copying the same form. We can prevent that."

The new rules require more information on how the home was made stronger. They add two pages to the discount application, and photographs must be included proving the renovations were made. Sam Miller says insurance companies will begin re-inspecting homes.

"Probably in most cases it will turn out that the discounts are appropriate. If we find, though, a case where the inspector made a mistake or there is absolute fraud, then the company will have the authority to, as the policy comes up for renewal, to discontinue the discount, and that's only appropriate. If you are getting a discount that you didn't really qualify for, you're not paying what your contract says you should be paying and that state law says you should be paying."

The average discount homeowners have been getting is in the neighborhood of 200-dollars. The new procedures and paperwork are posted on the Office of Insurance Regulation website.