May 2016

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Citizens said the policy contract changes (see below) were implemented to ensure that the use of emergency services is reasonable; that Citizens has the opportunity to assess the damage before additional permanent repairs are made; and that permanent repairs properly address the cause of the loss.

Specifically, the policy changes include:

  • In case of a loss to covered property, the revised policy contract requires policyholders to take emergency measures to protect insured property from further damage. Emergency measures only include what is reasonable and necessary to secure the home and prevent further damage, and may not exceed the greater of $3,000 or 1 percent of Coverage A limit, unless Citizens approves additional measures.
  • Second, to ensure that Citizens has the opportunity to inspect the damage and confirm coverage, the revised policy restricts when permanent repairs can begin. There may be no coverage for permanent repairs that begin before one of the following occurs: 72 hours after the loss is reported to Citizens, the loss is inspected by Citizens, or verbal or written approval is provided by Citizens. Note that these policy contract changes DO NOT require that a loss be reported within 72 hours.
  • Finally, when a home system (such as plumbing) suffers damage that causes a loss, Citizens has clarified that it will cover the access required to replace the part or portion of the system that caused the loss. Access to repair or replace parts and portions of the system not affected by the specific covered loss will not be covered.

The insurer said the revisions strike a balance between a policyholder’s need to make emergency repairs quickly and Citizens ability to control costs for all policyholders. The changes are needed, in part, to curb abuses involving assignment of benefits (AOB), under which policyholders give third party vendors the ability to control their claims following a loss, Citizens said. Citizens and other Florida insurance companies have warned the AOB problem with water loss claims is becoming a full-blown insurance market crisis.

“Protecting our policyholders after a loss remains the focus at Citizens,” said Chris Gardner, chairman of Citizens Board of Governors. “These changes will not affect our commitments to policyholders, but will help control costs, protect surplus and make sure we are ready when our customers need us most.”


Please enjoy the full article below!


Please call L & S Insurance at 1-888-244-7400 for free quotes on Home Insurance, Auto, Flood, Private Flood, Business & Commercial & Life & Financial products as well.

Abuse of assignment of benefits (AOB) from water loss claims has become a full-blown Florida insurance crisis that will mean higher insurance rates next year and for the foreseeable future for every Florida policyholder, according to Citizens Property Insurance Corp. CEO Barry Gilway and Chief Risk Officer John Rollins.

“We are going to have a round of rate increases from private carriers,” said Rollins. “South Florida will definitely have a rate increase. The question is more open in the rest of the state, but the trends are very disturbing.”

Private insurer executives have echoed the warning—and say hikes of as much as $1 billion will be needed.

The issue now most commonly referred to as just “AOB” took center stage at the Florida Association for Insurance Reform’s conference on April 28. Several industry experts said AOB is no longer just a problem for Citizens, the state-backed property insurer, and maintained the impact will go far beyond rates if the “crisis” isn’t addressed. The overall Florida market will also suffer, especially if the state is hit by a serious catastrophe.

“[AOB] is also trickling into the reinsurance pricing,” Bruce Lucas, chairman & CEO of Heritage Insurance said at the FAIR event. “The number one question asked of us by reinsurers is, ‘What are you doing about AOB?’ because after a storm, it could be a big issue.”

Citizens, which has seen AOB claims skyrocket, was the first to highlight the issue in its rate filing last summer. Now the insurer is retooling its efforts to combat the AOB abuse in light of Florida lawmakers’ failure to enact a legislative solution.

Please enjoy the full article below!