There are now only a few weeks before the official start of 2017’s hurricane season in the state of Florida. The state has been relatively untouched by this aspect of Mother Nature for the last few years until last September when it was barraged along the Atlantic coastline by Hurricane Matthew. The natural disaster resulted in claims amounting over $800 in the state.
Unfortunately, there is another, far different type of storm brewing in the Sunshine State that is causing damage. This destruction was created by contractors, lawyers and what is known as Assignment of Benefits (AOB). It has caused a great deal of pain to the insurance industry and to homeowners alike thanks to false claims of water damage.
After a catastrophe like a burst water pipe, a homeowner may hire a contractor to fix the issue. However, at the same time, the policyholder may never see the work done, even if their insurance company paid for it. The system is sadly exploited by people looking to profit, namely contractors and some trial lawyers, resulting in exaggerated or even fake claims, lawsuits and ever-increasing insurance premiums.
Generally, water claims are the most common of these issues. In December 2014, Florida’s Citizens Property Insurance Corporation received a whopping 562 AOB lawsuits. Out of that number, 513 involved water damage claims, mostly from Broward, Miami-Dade and Palm Beach counties. These lawsuits have a huge negative impact on policyholders and attack their wallets. In recent years, water claims have skyrocketed 28 percent and the frequency of such claims has risen by 46 percent.
As a result of the false claims, David Altmaier, the Insurance Commissioner, stated that policyholders in Florida could see as much as a 10 percent increase in premiums every year.
Fortunately, AOB reform is a huge priority in Florida and is being heralded by the Office of Insurance Regulation. Altmaier explained how the frequency and severity of water losses are spreading throughout the state and stressed the negative impacts homeowners and consumers are experiencing as a result.
The insurance agency is hoping to get this serious situation of AOB under control before the next major storm hits Florida. If it is not tackled before then, more people will suffer for years to come.