Bill aimed at South Florida water claims targets contractors, lawyers


A Florida House panel on Monday passed the latest attempt to turn off the faucet on what insurers say are costly and growing abuses, particularly in South Florida water claims.

Insurers say that can happen when contractors and other third parties get homeowners — often harried and just wanting to get repairs started — to sign over control of insurance benefits for, say, water damage from a broken pipe.

But contractors, attorneys and others paint a different picture, saying that insurers want to low-ball consumers and restrict their rights.

The chief risk officer of state-run Citizens Property Insurance Property Corp. warned of “impending financial catastrophe” if lawmakers failed to take action on practices that can raise the cost of claims two to four times. That is pushing rates up when they should be going down in Miami-Dade, Broward and Palm Beach counties, John Rollins said.

“Assignment of benefit” contracts are like “gas on a fire” in driving up costs, Rollins said.

Past efforts to restrict such contracts have deadlocked in the Legislature and failed in the courts over the past three or four years.

The current bill, HB 1097, does not ban contracts assigning benefits to a third party but requires notice to the insurer within three days for claims beyond emergency repairs to prevent further damages. It also restricts the circumstances in which contractors may place a lien on a consumer’s home, requires written consumer warnings and gives homeowners three days to pull out of such contracts.

But the bill is not “balanced,” argued Lee Jacobson, an attorney representing the Florida Justice Association.

“If you don’t tell the insurance company within 72 hours, your claim is basically denied,” Jacobson told House members. Yet insurers get 90 days to pay the first penny, he said.

Several members said they want further changes to the bill, but the House Insurance and Banking Subcommittee approved the measure sponsored by Rep. Matt Caldwell, R-North Fort Myers. The Senate Banking and Insurance Committee is scheduled to consider the Senate version, SB 596, today.

The House panel also passed another bill, HB 671, that attempts to ban “referral fees” between parties in such claims.

Florida’s insurance consumer advocate Sha’Ron James and a representative of the state’s Office of Insurance Regulation expressed support for HB 1097.

“Up to now, we have not been able to approve anything,” noted House insurance Chairman John Wood, R-Winter Haven, saying it’s time to find “comon ground.”


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