May 10, 2016
With new homeowner insurance restrictions looming July 1, state-run Citizens Property Insurance Corp. is kicking off a public relations campaign to alert new and renewing policyholders.
Citizens spokesman Michael Peltier said the campaign is an effort "to make the transition as seamless as possible."
The changes include a cap of $3,000 (or 1 percent of the overall coverage of the primary structure) on emergency repairs without Citizens' approval, and the right by Citizens to deny reimbursement for permanent repairs started within 72 hours after a claim is reported, unless the company first inspects the property or approves permanent work.
In a plumbing emergency, for example, a homeowner insuring a $275,000 house will be reimbursed for up to $3,000 of the cost of hiring a plumber to plug a ruptured pipe to stop gushing water. But the insurer wants to inspect the damage before new pipe and flooring are installed.
Also, Citizens plans to cover only the part of a system — such as a corroded pipe section — that caused the loss and will cover only the cost of accessing that section. In other words, the company will no longer pay to replace an entire drainage system or an entire floor if damage occurs to just a portion.
The changes were approved by Citizens' Board of Governors in January and by the state Office of Insurance Regulation in March. They are intended to curb increases in claims costs and premiums occurring, Citizens has said, because repair contractors persuade policyholders to sign over benefits of their policies, then submit inflated receipts and file suit if Citizens denies the claim or offers less money.
Repair companies and attorneys, in turn, say Citizens routinely denies claims unfairly or offers too little money for proper repairs.
New Citizens customers will be made aware of the changes if they buy a policy that takes effect after July 1. Renewing customers will learn of them in their policy renewal notices, Peltier said.
Citizens says a majority of the abuses originate in the tri-county area, home to about half of its policyholders.
State approval for the same or similar changes is being sought by private insurance companies in so-called "me too" filings submitted after Citizens' requests were approved.
Citizens is producing a color brochure it plans to include in all new and renewal policy packets. They also will be available on its website, citizensfla.com, and agents can request copies to distribute, Peltier said.
Insurance agents have been notified of the changes through bulletins and a webinar last week for about 800 agents, Peltier said.
Meanwhile, Citizens policyholders can expect still more changes this year. A new program in the works will enable Citizens to dispatch pre-approved contractors to make repairs. The managed repair program will be voluntary at first, but Citizens President and CEO Barry Gilway has said he expects to seek state approval to make it mandatory — meaning Citizens would determine who would make the repair.
The Florida Justice Association, a trade group for plaintiffs attorneys, said it's not planning any specific campaign to let consumers know how their legal options have changed.
But in a statement Tuesday, insurance lawyer and lobbyist Reggie Garcia criticized the $3,000 emergency repair limit as "artificial" and the time restriction on permanent repairs as "unreasonable." He called the policy changes a "back door approach" submitted after insurers failed to persuade the legislature to approve restrictions.
"Public hearings should have occurred prior to these policy changes, which would have given homeowners a better opportunity to be heard prior to some of their contract rights being taken away," Garcia said.