May 13, 2016
News Service of Florida
Customers of state-backed Citizens Property Insurance will face a number of policy changes as the company seeks to rein in water-damage claims that it blames for higher rates. The changes, which take effect July 1, deal with issues such as emergency services and permanent repairs. Citizens said this week that policyholders will need to get company approval for emergency measures that exceed $3,000 or 1 percent of what is known as the "Coverage A" limit, which reflects the cost to rebuild a policyholder's home. To receive coverage for permanent repairs, the loss must be inspected by Citizens or the work approved by the company. But if the company does not conduct an inspection or approve the work within 72 hours after a claim is made, the customer would be able to start permanent repairs. Citizens and other insurers contend that a proliferation of water-damage claims, particularly in South Florida, are driving up premiums. That issue is a key part of a fight about what are known as "assignment of benefits." When homeowners need repairs for problems such as water damage, they sometimes sign over benefits to contractors, who ultimately pursue payments from insurance companies. Citizens and other insurers have lobbied in the Legislature for restrictions on assignment of benefits, contending the practice leads to fraud and litigation. But plaintiffs' attorneys and contractors argue, in part, the practice helps homeowners hire contractors quickly to repair damage and also can help force insurers to properly pay claims. The trial lawyers and contractors also contend that assignment of benefits can help prevent consumers from having to fend for themselves in insurance disputes. Lawmakers could not agree during this year's session on assignment-of-benefits changes.