New Scheme by Insurance Companies is 'Abusive,' says State Consumer Advocate

10/30/2012
Tampa Bay Times

Thankfully for Floridians, Hurricane Sandy skipped the Sunshine State. But that hasn't stopped insurance companies from giving Florida homeowners the run-around, according to Florida’s insurance consumer advocate.

Robin Westcott penned a letter to Insurance Commissioner Kevin McCarty highlighting a new anti-consumer trend has emerged among the state’s property insurers.

After a homeowner submits a claim, the insurance company digs into the homeowner’s financial past to find evidence of a bankruptcy, lien, or foreclosure. If the homeowner has such a blemish on their credit history, the insurance company finds that the customer was never eligible for coverage, and then drops them, without covering their claim.

“This activity threatens not only homeowners’ financial stability but also the state’s economic recovery,” wrote Westcott, calling the practice “potentially unlawful” and “abusive.”

According to Westcott, several homeowners are being dropped from coverage after they file a claim, despite paying premiums to their insurers for years.

The insurance companies wait until the homeowner files a claim before dropping them due to ineligibility.

Westcott letter points out that Universal Property and Casualty Insurance Company is one of the insurers involved in the practice.

“This is a real-life Halloween trick that does not treat consumers fairly. We must give consumers relief from this game of ‘gottcha’,” Westcott wrote.

She has asked McCarty to investigate.