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Insurer's customers face rate hike, surcharges

By JEFF HARRINGTON
Published January 26, 2005

Florida homeowners covered by Nationwide Insurance Co. are facing a double whammy: a possible double-digit rate hike plus a 20 percent surcharge on their premium if they file certain types of claims.

On Monday, the Columbus, Oh.-based insurer filed with Florida regulators to raise its homeowners rates an average of 28.3 percent, the latest in a barrage of rate increases following the four-hurricane season. Florida's Office of Insurance Regulation is reviewing the request.

Separately, Nationwide, Florida's fourth-largest insurer, began notifying state customers this month that a 20 percent surcharge will be added to their premiums for each non-weather related claim that they file. Once applied, the surcharge will remain for three renewal periods.

A form letter sent to customers was not specific about the types of claims that would trigger the surcharge, but most would. Nationwide spokesman Eric Hardgrove confirmed that the surchage will be applied to claims due to theft, vandalism, fire, a burst water pipe or sinkholes, among others.

There are only five types of claims that will not count against homeowners toward a surcharge: losses due to a hurricane or other catastrophe; weather-related claims; guest medical payments; accidental death claims; and claims in which Nationwide can be reimbursed from "an at fault party."

The surcharge, part of a gradual rollout nationwide, is effective Feb. 1 in Florida.

The insurer describes the plan as a way to offer the lowest rate to claims-free customers. But when asked why Nationwide opted to add a surcharge for those who make a claim rather than a discount to policyholders without a claim, Hardgrove said he couldn't ananswer for competitive reasons.

Sam Miller of the Florida Insurance Council, a group representing most insurers in the state, said he did not know of a similar surcharge being imposed by others "but that's not to mean it's not out there."

[Last modified January 26, 2005, 18:57:02]