Insurers, contractors debate who should be allowed to pursue claims

Charges that home repair contractors and attorneys are teaming up to pad claims submitted to insurers will be the focus of debate for a third straight year in Tallahassee.

State lawmakers on the House Insurance Committee are scheduled Monday to discuss possible restrictions on allowing homeowners to sign over to home repair contractors their legal rights to bill insurers for damages, accept payments and file suits in disputes over claims.

Insurers and their allies charge that contractors, public adjustors and attorneys in South Florida have created a cottage industry by submitting inflated claims for repairs, mostly water leaks, then driving up legal fees by suing if insurance companies don't pay the bills.

The practice has become a problem in South Florida, and especially Miami-Dade County, where water damage restoration companies are aggressively targeting homeowners with water damage, insurers argue.

They point to an October 2013 report from Citizens Property Insurance Co. stating that while Miami-Dade property owners make up 19 percent of all Citizens policies, they account for 35 percent of all non-sinkhole-related claims and 67 percent of claims that result in lawsuits. Another 26 percent of litigated claims originated in Broward and Palm Beach counties.

Sam Miller, executive vice president of the Florida Insurance Council, which lobbies for the insurance industry, said "inflated claims" by a group of water restoration companies in South Florida are keeping insurance rates high in Florida. "Someone shows up following a fire and knocks on your door, saying, 'We'll take care of it but you have to sign over all your benefits,' " Miller said.

State Rep. David Santiago, R-Deltona, a member of the House Insurance and Banking Subcommittee, wrote an essay in January citing warnings by former Florida Insurance Consumer Advocate Robin Wescott that the issue is driving up homeowners' insurance rates by 17 percent a year. "In some parts of the state, claims settled with an assignment of benefits form averaged $32,000, nearly triple the amount of claims settled without one," Santiago wrote.

Some homeowners have discovered that contractors placed liens on their homes after assigning their benefits, and contractors have taken payments from insurance companies and failed to complete repairs, Santiago said in an interview.

But Lee Jacobson, an Orlando-based civil litigation attorney and member of the Florida Justice Association, comprising trial attorneys, says insurance companies are raising the issue because "they don't have anything else to blame higher rates on." The Florida Justice Association was formerly called the Florida Trial Lawyers Association.

Jacobson said contractors ask policyholders to sign over benefits because insurance companies too often fail to pay up or cover the full cost of repairs. Insurers don't like when contractors "expect to be paid for the work they performed," he said.

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Insurers, contractors debate who should be allowed to pursue claims