Water Damage Claims Blamed for Rate Hikes
Thursday, March 17, 2016
As of February 1, 2016, rate hikes for Citizens Property Insurance Corp. took effect. Articles in the SunSentinel and Insurance Journal explained how The Florida Office of Insurance Regulation (FLOIR) approved rate changes reflecting a decrease for 60 percent of Citizens customers, but an average overall 1.8 percent increase for homeowners’ multi-peril policyholders in Miami Dade, Broward, Monroe and Palm Beach counties. The reason for the rate increase in coastal areas? Citizens highlighted the surge in water damage claims in these South Florida counties as the main reason for rate increases.
Imposing rate hikes only in the areas where the claims are occurring is a sound practice for insurers, said John Rollins, Citizens’ chief risk officer. “The frequency and severity of water damage claims really ends up being paid for by policyholders in those areas,” Rollins said.
Efforts to curb what many say is an excessive and possibly fraudulent pattern of water damage claims by restricting homeowners’ ability to sign over insurance benefits to contractors, i.e. Assignment of Benefits, have failed in the legislature and in courts. Rollins told the board it’s up to South Florida residents to deal with the problem.
A previous blog post titled Water Damage and Assignment of Benefits warned of this exact kind of outcome. This post explained that many of the water remediation companies that require Assignment of Benefits end up suing the insurer to force payment of ridiculously inflated bills; i.e., charging $20,000 for extraction, when a comparable estimate for a 1500 sq. ft. house runs about $3,500.
When this happens, insurance companies are forced to pay extraordinary attorney fees and court costs, and they offset those costs by raising premiums for their insured. The more Assignment of Benefits and insurance fraud there is, the more we all pay! As evidenced by the recent Citizen’s rate hike.
Fortunately, Joe Taylor Restoration (JTR) is not part of the problem, but part of the solution. JTR does not use Assignment of Benefits- it is not part of the contract we sign with the property owner. And as a preferred vendor for over 45 insurance carriers in South Florida, we work with the insurance carriers to ensure that prices are fair and equitable. If there were more water damage restoration companies like us, perhaps insurance costs would not continue to rise. If you are faced with a water damage claim, contact a company with integrity- contact Joe Taylor Restoration.