A group of homeowners announced Tuesday it's suing Citizens Property Insurance Corp., accusing the state's largest home insurer of running a software system that overvalues the cost of home replacement and drives up insurance premiums.
The software is a back-door way to raise insurance rates without approval by state regulators, according to the class-action lawsuit.
The homeowners, along with representatives from the nonpartisan Florida Association for Insurance Reform and state Sen. Mike Fasano, R-New Port Richey, held a news conference Tuesday to announce the suit.
"Citizens has taken it upon themselves to decide that a homeowner's home is worth a lot more than what they could sell it for and more than it's actually worth," Fasano said.
The software, called the 360Value, sparked controversy in December as homeowners across Florida received and rebutted their new policies. The complaints centered on the estimated value of replacing homes if they were wiped out by disaster.
Citizens, established by the state as its insurer of last resort, said at the time that many Floridians are underinsured, so it brought in the new system to make sure homeowners carry enough insurance to pay for rebuilding. Instead of relying heavily on the word of real estate appraisers, Citizens turned to the software.
Citizens told agents it would rely solely on the new software for estimating the replacement costs and would no longer take into account estimates from real estate appraisers or independent general contractors.
Real estate agents were told to input data about a home — from the year it was built to the type of countertops it has — and the program would spit out a value.
But many homeowners say those values are inflated.
Consumer advocates accuse Citizens of using the program as an excuse to jack up rates. They say they fear other insurance companies will do the same if Citizens is successful.
Joe Freitas, of New Port Richey, saw his home value skyrocket. He said his insurance agent recommended a $139,000 policy — enough to give him a cushion in case of a disaster involving his $109,000 home.
But the Citizens software estimated it would cost about $237,000 to rebuild and the company wouldn't insure the house unless he paid premiums on that amount.
"I really do feel strong-armed," Freitas told the Tribune in December.
Citizens, responding to homeowners' complaints, recently said it would stop relying solely on the software.
But Fasano said that's not happening.
Citizens said Tuesday it continues to look at homeowners' complaints but it stands behind its efforts to make sure they have enough insurance.
The company released this statement:
"Our motivation in establishing an accurate replacement cost valuation is to protect our policyholder and make sure they can restore their homes after a catastrophic loss. Any assertion to the contrary is simply wrong."