Palm Beach Post – August 30, 2016
State-backed Citizens Property Insurance Corp. is looking for a 9 percent increase from Palm Beach County homeowners – and an average 6.8 percent statewide – even though there hasn’t been a hurricane in more than 10 years.
The reason has nothing to do with the ravages of nature. Look instead to the greed of some lawyers and unscrupulous building contractors.
AOB lawsuits work like this: You have a leaky pipe and you call a water mitigation company for emergency dry-out services. The company sends a technician and, while drying out the house, presents you with documents to sign, including an AOB, by which you forfeit your insurance rights and benefits. This allows the contractor to bill the insurance company directly, and get the proceeds directly. You see it as a convenience. The contractor and lawyer see it as a gravy train.
The lawsuits arise when the insurer denies a claim because some of the losses aren’t covered by the policy. The water mitigation company now has an unpaid bill, so it sues the insurer. A lawyer is happy to file suit because it can charge big, “one-way” fees: if the claimant wins, the insurance company pays. But if the insurer wins, it can’t collect its legal fees from policyholders. In other words, claimants have nothing to lose by filing suit.