State stands up to insurance mess
By Natalie Gutwein
There are actually some good things happening with homeowners insurance in Florida.
If you own a home in Florida and you have it insured, chances are you’ve seen rate increases over the last couple of years. And that’s if you were one of the lucky ones. If you were one of the unlucky ones, your rates didn’t go up — you were just dropped. And if you’ve purchased a new home and insured it in that same time frame, you really know the pain of today’s insurance market.
Insurance companies are far more particular about a property’s elevation, age of the roof, and wind and water mitigation — such as impact-rated windows, doors, and roof strapping that meet today’s code. Gone are the days when an inspector could just state that there was “no attic access” on a wind mitigation report and you’d still receive insurance discounts. The insurance companies want to know exactly what they’re dealing with so they can mitigate their risk as much as possible.
However, it’s widely assumed by the general public that the insurance instability in Florida is solely attributable to hurricanes.
That’s actually not the case. In its last legislative session, Florida passed a new statute to try and stabilize the market — to help retain the insurance companies that haven’t left yet, attract new ones, and combat one of the biggest culprits of Florida’s insurance catastrophe: insurance fraud.
The first policy the statute did away with is what’s commonly referred to as “one-way attorney’s fees.” If a claimant sued their insurance company and received one dollar more than what the insurance company had originally offered for a settlement, the insurance company had to pay all legal fees. It’s thought that the origin of this policy was to protect policyholders from the big bad insurance companies, but what it ended up doing was encouraging attorneys to file frivolous lawsuits, knowing that the insurance companies would ultimately end up paying their fees.
The second major issue is the “assignment of benefits.” This is when a claimant signs over their payments to a third-party provider. For example, an insured person has a water leak in their home and calls a company to clean and repair it. The company tells the homeowner that they can pay the invoice themselves or file a claim with their insurance company and sign an assignment of benefits. The insurance company will pay the vendor directly, with the homeowner only responsible for their deductible. This also led to insurance fraud. Unscrupulous companies not only over-billed, but many times homeowners were involved in lawsuits of which they were unaware.
The statute shortens the time a homeowner must file a claim after an incident from five years down to one, and shortens the time insurance companies must process claims from 90 days to 60.
According to the National Association of Insurance Commissioners, only 8% of all homeowners’ insurance claims are in Florida, but 79% of insurance litigation occurred here. Hopefully, these sweeping changes will help turn those numbers around, stabilize our insurance market, and encourage carriers to return to the state.
Stay sunny, Siesta.
(Natalie Gutwein is a licensed Realtor with Sotheby’s International Realty’s Judie Berger Team and a member of the board of directors of the Siesta Key Association civic group.)
Author: Natalie Gutwein
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