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Insurance Consumer Advocate

Sha'Ron James

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Tallahassee, FL 32399-0308

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Thursday Editorial: Property insurance fraud is just the latest scame to hit Florida


Date: April 05, 2017
Source: The Florida Times-Union


Florida: Where scams begin and grow.

Though Florida went about a decade without a direct hit from a hurricane, many property insurance companies were struggling with sinkhole claims.

Random cracks in pavement were being considered sinkholes.

Finally, the Legislature cracked down but not before millions of unwarranted claims were paid.

Now here is another. Water claims usually are simple to resolve. Unlike wind, the evidence usually is obvious. Then around 2010 something changed.

1. Water loss claims not related to hurricanes or storms increased.

2. A loophole in a well-intended law involving assignment of benefits was found. Property insurance policyholders can transfer assignment of benefits to a third party. In many cases, the policyholders may be signing away their rights. The third party may receive all the benefits of the policy without the duties.

3. Litigation has skyrocketed as a few law firms have used Florida law to file lawsuits over these claims.

Insurance companies, fearful of the cost of lawsuits, are willing to pay relatively small individual claims rather than pay the larger legal settlements.

It’s worse in South Florida.

Water claims: Up 9.4 percent in South Florida (Palm Beach, Broward and Miami-Dade) but just 3.2 percent elsewhere.

Cost of water claims: $19,966 average in South Florida, $7,540 for the rest of the state.

Cost of claims: Up to $9,000 for non-litigated, $30,000 for litigated claims.

Premium increases: From $637 to $1,882 in South Florida and from $149 to $243 elsewhere in Florida.

As a result, here is what Citizens, the state property insurer, has instituted:

• No coverage for permanent repairs that begin before 72 hours after the loss is reported to Citizens, the loss is inspected by Citizens or approval by Citizens.

• Limit on emergency repairs of $3,000 or 1 percent of the coverage, which is greater, unless Citizens approves additional funds.

A public information campaign to encourage policyholders to provide Citizens a chance to handle a claim before going to a third party.

• The Legislature is being asked to make changes, such as requiring third party vendors to keep the same policy requirements as the original policy.

Thankfully, many of these fraudulent practices haven’t reached Northeast Florida.

In recent years Citizens has reduced policies from 1.5 million to about 500,000 with only about 450 of them in this area.