Insurance Claims

Effort to Limit Third-Party Property Insurance Claims Stalls in Legislature

Ron Hurtibise | Sun Sentinel
April 24, 2015

Insurance industry-backed bills aimed at restricting repair contractors' ability to require homeowners to sign over insurance benefits before repairs can commence likely won't become law this year, supporters and opponents concede.

The bills — in the state House and Senate — stemmed from arguments by insurers that water restoration companies in South Florida are padding bills for repair work and then filing hundreds of lawsuits if insurers failed to pay the bills in full.

Contractors counter that allowing homeowners to sign over benefits lets repair work get started immediately — without homeowners having to pay money upfront. Lawsuits have increased, they say, because insurers too often fail to pay claims quickly and refuse to discuss the scope and costs of repairs with them.

Senate and House bills filed by Sen. Dorothy Hukill, R-Port Orange, and Rep. John Tobia, R-Melbourne Beach, would have allowed property insurers to prevent homeowners from assigning benefits of their policies to third parties. While the House version stalled in committee, the Senate version was amended to address some of the contractors' concerns, including allowing assignment of up to $3,000 to repair companies. But homeowners would have been barred from transferring the right to sue insurance companies for payment for materials and repairs.

Contractors contend that insurers want homeowners to be legally responsible for collecting benefits because, as novices, they are easier that experienced contractors to bully into accepting lower payouts.

Several dozen contractors showed up at the Senate Judiciary Committee's final meeting of the session on April 15 prepared to argue against the restrictions. But the committee, after a lengthy debate over a 24-hour abortion waiting period, adjourned without considering the insurance bill. Without approval by the Judiciary committee, the bill cannot advance to the full Senate.

The Florida Justice Association, composed of attorneys allied with contractors on the issue, is concerned that a pro-insurance industry Senate member might still try to get the proposed restrictions enacted as an amendment to an unrelated bill.

The association worked with three Democratic senators on adding 21 contractor-friendly amendments to the Senate bill in the hours leading to the committee meeting, said Gary Farmer, a Fort Lauderdale attorney and chair of the association's Legislative Committee. He acknowledged that the large number of amendments reduced the likelihood that the bill would be discussed.

"Given the other bills on the calendar, including the abortion bill, and given the need for extensive discussion on numerous alternatives on the assignment of benefits bill, it looked unlikely that bill was going to be taken up," Farmer said.

Florida Insurance Council spokesman Sam Miller on Friday said the industry "needs to do a better job at quantifying how this is making costs go up." During a meeting on the subject before the session began, advocates for more restrictions could not produce evidence that homeowners were complaining about the practice, or data linking claimed abuses by contractors to higher costs for insurers.

Instead, they pointed to data compiled by the state-run Citizens Property Insurance Corp. showing that 96 percent of all lawsuits related to water damage to Citizens customers originated from Miami-Dade, Broward and Palm Beach counties over nearly five years beginning in 2009. Driving those lawsuits, and higher claims, are South Florida water damage restoration companies and their attorneys, insurers said.

The content of this article is intended to provide general information and as a guide to the subject matter only. Please contact an Advise & Consult, Inc. expert for advice on your specific circumstances.

SOURCE: www.sun-sentinel.com

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