If the legislature in Tallahassee was a football player, they would be Jim Marshall – the defensive end for the Minnesota Vikings who in 1964 ran 66 yards the wrong way into his own end zone. The legislative session has adjourned with a complete failure to pass any solution to the out-of-control Assignment of Benefits (AOB) scams that are driving up insurance rates all over the state. The legislation would have offered consumers considerable protection against signing away their rights to their own insurance money, and even to say what repairs take place within their own home. The failure to pass this legislation simply ensures that unethical vendors and their lawyers will continue to steal homeowners’ insurance policy rights, to the detriment of everyone’s wallet.
Citizens insurance is projecting a 2017 rate increase of 189.6 percent, according to Claims Journal. Though Citizens is capped raising rates at 10 percent per year, it will hit that cap for many years to come unless these unethical operators and the attorneys profiting from their lawsuits are brought to heel. As noted in the article, 85 percent of all AOB lawsuits involving water damage restoration vendors last year were filed by just 31 law firms. The original intent of Assignment of Benefits was to allow vendors to be quickly paid by home insurers for performing emergency restoration or repairs, without putting the homeowner in the middle. As with all good things, a few bad apples can spoil the entire barrel.
AOB lawsuits have increased since 2005 from 9,424 to over 92,004 in 2013 and 2014. In certain areas of South Florida, where AOB fraud is rampant, claims without AOB average about $12,000, while those using AOB add $20,000 to the bill. Attorney’s fees are also part of the problem. One-way attorneys’ fees allow lawyers representing vendors to collect legal fees in disputes with the insurance companies, but when the insurance companies win they are unable to collect legal fees. It is actually cheaper for the insurance companies to pay the claim than it is to fight it in court where they stand to lose more money than the claim is worth simply paying their own lawyers to fight the claim.
We understand that when your home has been damaged, it is a traumatic and worrisome time. Homeowners just want to get back to their normal routine, in their own home, with the least amount of hassle possible. However, this scam is about signing away your rights as a policyholder, and giving them to people who do not have your best interests at heart. This scam is spreading from South Florida, and has the potential to do significant harm to Florida homeowners statewide.
We urge you that instead of signing away your rights, you immediately call your insurance agent and consult with them as to the best way forward. Do not give in to contractor pressure or threats, and above all do not sign away your rights as a policyholder.