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Sha'Ron James


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Action 9 investigates hidden insurance rate hikes

 

Date: February 22, 2017
Source: WFTV 9 ABC
Author:  Todd Ulrich & Gerry Mendiburt

 

ORLANDO, Fla. - Action 9 exposes what's driving up homeowner's insurance rates and it's not hurricanes.

Instead it's routine plumbing leaks when water damage contractors take over insurance claims and drastically drive up repair costs.

Sarah and Lonnie Zach still have a demolished bathroom five months after a plumbing leak. They blame a restoration company that collected most of their homeowner’s insurance settlement.

“We've been taken for all of our policy,” said Sarah Zach.

Like many water damage contractors, the company wanted the Zachs' to sign a document first.

“Did they explain that contract to you?” asked Todd Ulrich.

“No, they didn't explain anything,” replied Sarah Zach.

It's an Assignment of Benefits form also known as anAOB, giving the contractor complete control of their insurance claim.

They said the company told them to sign it so they can start working. The restoration company did some demolition, sprayed a mold treatment, set up air cleaners then collected $3,000 from their insurer.

“It's just outrageous that they would charge that much for what they did,” said Lonnie Zach.

That didn't leave the Zachs enough insurance money to repair the bathroom.

Now a growing coalition of insurance companies, consumer, and trade groups claimAOBcontracts are out of control.

“It's an absolute crisis today,” said Citizens Property Insurance CEO BarryGilway.

The state's insurer of last resort found itsAOBwater claims jumped by 50 percent since 2011.

“What consumers don't understand is they pay for the fraud,” saidGilway.

A typical damage claim average is $7,000. AnAOBlitigated claim soars to $27,000, that’s more than three times as much.

And critics said that contract makes it far harder for insurers to legally challenge the contractor's bill.

“The consumer is going to pay more and more and more for property insurance,” saidGilway.

Just as Florida's hurricane drought was slowing premium increases, Florida's Insurance Commissioner now estimates there will be 10 percent premium increases driven byAOBabuse alone.

“I'm appalled by how someone can get away with doing that to consumers,” said Sarah Zach.

FloridaAOBreform legislation failed the past two years, critics will try again next month.

The restoration industry and its attorneys claim consumers need these contracts to fight for the coverage they deserve.