The Real Deal Miami

Citizens lobbies to loosen contractors’ grip on claims for non-storm water damage

The state-run property insurer wants to restrict so-called "assignment of benefits" deals

October 01, 2016 05:00PM

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Barry Gilway, Citizens' president and CEO

Barry Gilway, Citizens’ president and chief executive officer

Citizens Property Insurance Corp. will push for a state law that limits contractors’ ability to pull benefits directly from a home owner’s property insurance  policy for repairing interior flood damage unrelated to a storm.

State-run Citizens claims that tri-county South Florida accounts for the bulk of a costly surge in both claims  and lawsuits for non-storm water damages.

The property insurer is lobbying for legislation limiting contractors’ ability to require an assignment of benefits from a home owner’s insurance  policy before starting to repair interior flood damage due to burst water pipes or other non-storm causes.

The insurance industry has complained that contractors with so-called “assignment of benefits” agreements charge extra for unneeded work,  submit excessive claims to insurers  and sue them for denying benefits or paying too little.

Insurers say contractors frequently file such suits in the names of the policyholders without their knowledge.

Citizens says the cost of “assignment of benefits” agreements could put upward pressure on property insurance rates in Miami-Dade, Broward and Palm Beach County.

It also could cause Citizens’ policy count to rise next year by a projected 30,000 policies, with most of the growth coming from South Florida.

Citizens’ president and CEO, Barry Gilway, said last week at the insurer’s Board of Governors meeting that private-market insurers are refusing  to underwrite new home owner policies in South Florida due to the high level of water damage claims there: “New business has no place to go but us.” [Sun-Sentinel] — Mike Seemuth