South Florida's leaky pipe problem poses risk to homeowners insurance
Florida’s homeowners’ insurance landscape has been treated gently by Mother Nature in the last decade, but the industry sees demons approaching that are increasing the cost and reducing access to affordable property insurance, especially in South Florida.
The culprit, according to officials at the Florida Chamber of Commerce’s Insurance Summit Thursday in Miami, are water damage claims abuses by contractors and their attorneys.
State law allows policyholders who need repairs to their homes to assign their rights to seek reimbursement from the insurance companies to third-party contractors. Some contractors persuade homeowners whose pipes or appliances have ruptured to assign over the benefits (AOB) and, working with attorneys, file lawsuits against the insurer if the claims are denied or payments are reduced.
The number of AOB claims in Florida exploded from 405 in 2006 to 28,000 in 2016, said Chief Financial Officer Jeff Atwater, whose office oversees the Office of Insurance Regulation.
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