Home Owner Insurance Pinellas County Florida

Citizens delivers gale-force blow to wallets with high estimated replacement costs

Ruth Lauro has lived in her tiny New Port Richey home since Jimmy Carter was president. Today, the two-bedroom house is worth little more than the $33,500 she and her late husband paid in 1979.

Yet Citizens Property Insurance Corp. says it would cost $124,000 to replace the house — an amount that is driving up Lauro's costs of ownership to the point she fears she might have to move out.

"Since Citizens took over, it's been impossible to keep up with all the increases,'' says Lauro, who at 82 is actively looking for work. "They shouldn't be doing this to people.''

Like Lauro, many homeowners struggling to make ends meet have been examining their insurance bills and flinching at what they see: higher premiums based on replacement costs that seem way out of line with the property's market value.

Homeowners and one prominent legislative critic accuse state-run Citizens and other insurers of using replacement costs to circumvent rate caps.

"Truly this is a way for Citizens and the private companies to increase rates without having to get approval from the Florida Office of Insurance Regulation,'' says Sen. Mike Fasano, R-New Port Richey.

Citizens, which insures more Florida homeowners than any other company, insists that's not the case. "We do not have any incentive to overinsure," said spokeswoman Christine Ashburn.

To the contrary, she said, if Citizens has to pay for damage from a major hurricane, the last thing it wants to do is pay an excess amount per claim because of an inflated replacement value.

Nonetheless, Citizens has agreed to take a closer look at a small sample of Tampa Bay and South Florida homes whose replacement values it calculated with a software program called 360Value. The program was developed by the same company that Louisiana's attorney general sued in 2007 for its part in an alleged scheme to use damage-estimating software to enrich insurance companies at the expense of homeowners after Hurricane Katrina.

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