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Big lawsuit coming against Citizens Insurance

New Port Richey, Florida -- A big class-action lawsuit coming Tuesday accuses Citizens Insurance of dodging state law to create massive "back door" rate increases.

HOW TO JOIN CLASS ACTION SUIT: citizensclassaction.com

Here's what the lawsuit will say happened to Citizens customers.

Let's say the real cost to replace a home is $100,000.

But Citizens uses its computer software to do an estimate, and decides that amount should be $200,000.

At first, that sounds good. If there's a fire or disaster, $200,000 will definitely be more than enough to replace the house, and maybe even build a nicer one than before.

But here's the flip side of that.

Insuring it for $200,000 means as a homeowner, you'll pay a higher premium -- it will cost you more each month to insure the house than if you paid for just $100,000 in insurance.

The groups suing Citizens Property Insurance Corporation say the company did this intentionally with some of the homes it insures.

A computer program called 360Value was used to figure the replacement costs of people's homes. But the lawsuit says that value was often far more than what is a realistic replacement cost -- and that led to higher insurance prices for its customers.

There are a bunch of state laws in place -- even a whole state Office of Insurance Regulation -- designed to determine what rate an insurance company can charge you.

This lawsuit alleges Citizens has used that 360Value software program to get around all of that regulation and charge homeowners more than their legally-allowed rate.

"If it's proven that these homes are being inflated -- the values are being inflated -- just so Citizens can raise rates, that is unconscionable by any, whether it be a government entity like Citizens or a private company," State Sen. Mike Fasano (R-New Port Richey) told 10 News.

Earlier this month, a Citizens spokeswoman told the Tampa Bay Times, "We do not have any incentive to overinsure."

She explained if there's a major disaster, the last thing Citizens would want to do is pay out a whole bunch of extra, inflated damage payments.

Citizens is run by the state, and insures more homes in Florida than any single private company.

It's the "insurer of last resort" and in many cases people who have insurance through Citizens would have a hard time getting it through any other insurance company.

So, if Citizens is charging you too much, you may not have any option to switch to another company.

The class action lawsuit is set to be announced on the steps of the Capitol in Tallahassee by the two organizations behind it: Florida Association for Insurance Reform or FAIR, and Beausoleil Law Group of Florida.

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