It comes as no shock to many that the state-owned Citizens Property Insurance Corporation claims it needs to raise homeowners insurance rates.
Citizens cites the Florida Legislature not passing any assignment of benefits (AOB) legislation as the reason rates will have to go up due to alleged fraud associated with AOB and, specifically, water claims. It is a convenient – and misleading – tool to be able to create a crisis and then propose a revenue-generating “solution.” By doing this, Citizens and private insurers are aiming to take away the ability of homeowners to have a roofer or contractor who fixed their homes deal directly with the insurance companies to help ensure the homeowners are paid fairly.
There is simply no truth to the premise that the failure to get rid of the AOB practice would or should result in higher rates for homeowners. Sadly, this is not the only issue that has become tainted due to factually incorrect statements made by Citizens officials. Citizens president Barry Gilway recently made the false statement that the company could not figure out why homes built 50 years ago had water leakage from the same 50-year-old pipes.
The true cause of increased litigation is the use of incredibly unfair policy language and broken claims handling practices of insurance companies – especially Citizens. We are seeing an alarming rise in the use of harmful exclusions within homeowners’ policies, which leave assignments as one of the last tools available to help homeowners. Citizens and many of the private insurers are using the “repeated seepage or leakage” exclusion to prevent policyholders from receiving repairs paid by their insurance policies.
One particularly egregious clause states that coverage may be denied for “constant or repeated seepage or leakage of water or steam, or the presence or condensation of humidity, moisture or vapor; which occurs over a period of 14 or more days, whether hidden or not.”
So Citizens and private insurers want to deny coverage for unforeseen, unknowable, and unfixable issues with your home and expect homeowners to believe that they want to repair their homes, honor their policy and reduce their rates.
The truth is, Citizens and other insurers are just looking for any excuse to raise rates. Now that it has fewer insureds, Citizens collected less in premiums but still wants to have a budget that supports Gilway’s demands and allows them to purchase heaps of reinsurance.
The alternative dispute resolution process is not working for consumers. The only shield a homeowner has is the 100-year-old property right called AOB. For insurers who act in good faith, there is nothing to fear from maintaining the current AOB framework. It is telling that the insurer, whose solvency is guaranteed by the taxpayer, is pushing hardest to eliminate the peace of mind of consumers.
Farmer Jaffe Partner Gary Farmer has spent almost his entire career fighting for the rights of consumers. In addition to his work in the courtroom, Farmer has devoted thousands of hours serving as a board member, officer and in 2012-2013 as president of the Florida Justice Association, the state’s largest and most effective consumer protection organization. For more information, call our law firm at (954) 524-2820.