Insurance companies in Florida and home contractors expect to battle over changes to assignment of benefits laws again this session. The rise of lawsuits where contractors are suing insurance companies to get paid and cover attorney fees has both sides arguing they are the only ones who are protecting the homeowner’s interests.
“This gentleman here, I’ve got pictures and all the emails right here," said Jeff Grant, owner of Bone Dry Restoration and Cleaning in Tallahassee. "He’s the one who lives next to the senator. I’m almost eight months and haven’t gotten a dime for mitigation.”
Grant is sitting at his desk at the water damage restoration company. He’s showing off a stack the paperwork from one of he 10 files on his desk he said are unpaid insurance claims.
Grant said if the insurer doesn’t pay up soon, he’ll file a lawsuit to get paid. But Florida Insurance Commissioner David Altmaier said his office is helping push legislation this session that would limit the insurance companies paying the contractor’s attorney fees. Contractors and civil law advocacy groups oppose that change. Some contractors said the insurers are trying blame them for the rising rates of property insurance.
Many contractors use what’s called an assignment of benefits. That means the policyholder or homeowner signs a contract so the vendor can provide a service and bill the insurance company for it. If the insurance company doesn’t pay or doesn’t pay the entire bill, the vendor takes them to court. If the contractor wins, the insurance company pays the contractor’s attorney costs.
Citizens Property Insurance CEO Barry Gilway said the statute, also known as the one-way attorney fee statute, was meant to apply just to policyholders, not vendors.
“The vendors are simply turning around and they are suing the insurance company, you know, for the total amount of whatever they determine is appropriate for a specific claim," he said. "The implications of that for a company like Citizen’s is that’s becoming a massive consumer issue.”
Gilway said contractors tell homeowners they can remodel their houses and force the insurance company to pay for it or they inflate the claims. Company data suggests both water damage claims and vendors using AOB contracts are on the rise.
Lee Jacobson with Florida Justice Association said he questions Citizens' numbers. He said the insurer’s assertion of more water damage claims could easily explained by causes like the age of the house, not fraud.
“The biggest misnomer in this argument is that Citizens data is showing certain trends," the attorney said. "Well, Citizens by itself, proscribed name, is the insurer of last resort. Meaning there are insurance companies that won’t insure these homes are various reasons, including but not limited to the types of materials that are being used.”
Gilway disagrees the claims are due to the age of houses. He said the costs of litigation are the reason it and other insurance companies are raising prices. He says if the attorney fee law doesn’t change, companies will leave markets or charge a lot more.
“It’s simply not going to stop the increase in premiums we have to charge for the insureds," he said. "I think every private market in Florida would make the same contention. I mean, this is the primary issue that we’re facing. There are many other things we need to do to protect consumers because it’s not a fair playing field for the consumers right now.”
Grant said it’s the insurance companies who are hurting homeowners by having their preferred vendors cut corners restoring houses. He says there is a book of standards that contractors and insurance adjusters should follow. He says that’s why contractors are winning in court.
“Cause I can tell, you file with this book and you document that loss a 100 percent, I’m not going to lose that case,” he said.
But, Grant says his businesses won’t survive if the insurance companies don’t pay the bills and the attorney fee statute is changed. He says he couldn’t afford to pay the attorney fees on his own.