The Home Insurance Guru

Florida’s passage of a homeowners’ claims bill of rights left few satisfied after lawmakers largely codified current law while avoiding controversial issues such as the practice of policyholders assigning their claims payments to contractors.

The bill of rights was a priority of the state’s Chief Financial Officer Jeff Atwater and was initially drafted by the state’s insurance consumer advocate’s office.

Atwater said the bill is needed given that about 350,000 homeowners file claims each year and his office receives 125,000 calls from policyholders either filing complaints or searching for answers about their claims.

“This much-needed bill of rights will notify Florida homeowners of their rights and responsibilities when filing an insurance claim and give them confidence that they will be treated fairly during a stressful situation involving their home,” stated Atwater.

The 12-point bill of rights is meant to inform homeowners of timelines such as one requiring insurance companies to acknowledge a claim within 14 days of being filed. Additionally, insurers must within 30 days of receiving a proof-of-loss statement, confirm a claim is covered, partially covered or denied. Within 90 days, insurers must either pay the claim in full or in part or deny the claim.

The bill of rights also advises policyholders what they need to do in case they have property damage, including that they should contact their insurer before hiring a contractor.

While Atwater and his allies have been declaring victory, some who participated in crafting the bill walked away disappointed in an outcome that created no new legal rights for homeowners or insurers.

What seemed at first a rather non-controversial piece of legislation turned into a heated debate over a so-called “assignment of benefits” provision.

Under this provision, homeowners can sign over their financial rights to be paid for a claim so that instead the payments are made directly to a contractor making repairs instead of to the homeowner.

The contractor also assumes the policyholder’s legal right to dispute a claim and file suit against an insurer. If the contractor prevails in court, in addition to the insurer having to pay the claim, it must also pay the contractor’s legal bills.

From insurers’ point of view, this has created a cottage industry where trial lawyers and contractors work to maximize the monies they can receive from insurers regardless of the real cost of the claim.

Personal Insurance Federation of Florida Executive Director Michael Carlson said that is a major reason his association supported doing away with the assignment of benefits.

“What we are seeing under assigned benefits is unscrupulous contractors who tell homeowners that in order to get repairs they have to sign a form signing away their rights,” said Carlson. “Then the vendor will inflate the claims costs then tell the insurer you owe us this much or we will sue you.”

Carlson said that in addition to increasing claims costs and unnecessary litigation, the assignment of benefits practice keeps consumers in the dark about their own claims. For example, he said, policyholders have had lawsuits filed on their behalf without their knowledge.

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

http://www.insurancejournal.com/news/southeast/2014/06/23/332627.htm