JAX Times Union Opinion Lead Letter:
Shady lawyers are exploiting loopholes in property insurance policies
Last year, Florida broke a record by going 10 straight years without a major hurricane. But not everything is calm as we enter this year’s hurricane season, which started June 1.
Rampant abuses involving Assignment of Benefits are costing consumers more money, threatening the state’s property insurance market and could become our next big storm.
An explosion in questionable, non-catastrophe claims filed by water extraction firms, roofers and other vendors is resulting in higher premiums for all residents.
Assignment of Benefits is a legal tool that allows repair vendors to receive payment from insurance companies for work they perform at a policyholder’s home without the homeowner having to pay money upfront.
However, in the past decade, unscrupulous trial lawyers and vendors have taken control of a homeowner’s policy, inflated the scope and cost of claims and sued the insurance company if it refused to pay the jacked up bills.
Between 2005 and 2014, the number of Assignment of Benefits-related lawsuits grew nearly 1,000 percent, reaching more than 90,000 in 2013-14.
What began as a problem in South Florida is rapidly spreading statewide.
The issue is seriously impacting Citizens Property Insurance Corp., the state-run insurer. Last summer, Citizens said it was forced to raise premiums for South Florida policyholders because of an avalanche of non-weather-related water damage claims and Assignment of Benefits litigation. Now, Citizens warns it may have to boost statewide rates by up to 10 percent annually if these abuses persists.
Add a hurricane into the mix in 2016 and the impact on consumers’ wallets could be incalculable.
Each year, key reforms have been blocked by pressure from the cottage industry of unscrupulous trial lawyers and repair vendors who are working together to profit from this scheme.
Let’s hope that legislators who opposed reasonable reforms in the last legislative session will finally recognize that their constituents are paying for their inaction and pass real reforms that protect consumers in 2017.