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Insurers Under Fire Once Again: Watchdog says Universal Cancels Policies Improperly

10/31/2012
By: Doreen Hemlock
Sun Sentinel


Florida's insurance watchdog Tuesday called for an investigation into companies that she says deny claims by alleging that customers misrepresented their finances when applying for policies.

Insurance Consumer Advocate Robin Westcott cited repeated complaints against Fort Lauderdale-based Universal Property & Casualty in asking Florida regulators for the probe.

Westcott said insurers should verify applicant's financial information within 90 days of coverage - not take premiums for years before checking credit reports and then later cancel policies and deny claims.

"This tactic threatens homeowners' financial well-being as well as the state's economy and must be addressed swiftly and appropriately," Westcott said in a news release.

"This is a real-life Halloween trick that does not treat consumers fairly. We must give consumers relief from this game of 'gotcha.'''

Universal executives did not return phone calls or emails late Tuesday.

Westcott said insurers appear to be using bankruptcy, liens, judgments and "perhaps" foreclosures as a reason to find Floridians ineligible for certain homeowners policies.

When those policies are canceled, homeowners may be bound by terms of their mortgage to retroactively buy coverage under a lender-placed program. If they can't afford that program, they could lose their homes.

In addition, cancellations will drive more to the state-backed insurer of last resort, Citizens Property Insurance Corp., which is trying to trim the number of its policyholders, she said.

Westcott asked regulators to work with insurers on "reasonable standards" for underwriting that recognize "Florida's unique circumstance with regard to the foreclosure crisis." Almost half of the mortgages in Florida are "upside down," with more owed than homes are worth, and Florida is among the hardest hit nationwide in foreclosures and bankruptcies, she said.