Florida is awash with sleazy home contractors who are stealing control of repair claims from trusting homeowners. Just sign here, the contractor nicely says, offering a document that legally hands over managing of the damage claim to the contractor.
That legally binding signature spawns something called assignment of benefits (AOB). It should be called assignment of home-repair nightmares.
Welcome to the Florida cesspool of claim abuse — sticking homeowners stuck with ever-ballooning premiums while cheaters grow rich off their misery.
AOBs started as a convenience to get honest home-damage claims paid more quickly, and save money. Now bad actors have cleverly found loopholes to exploit the well-intended legal device.
Many contractors abuse illicit claim takeovers to secretly gouge insurers with inflated repair claims while doing shoddy or no work. They also hire complicit lawyers to sue insurers if ballooning repair claims are rejected or reduced. All this happens behind the unknowing homeowner’s back. Contractors parachute in with extra force after devastating storms such as Matthew and Irma, which left desperate homeowners vulnerable to come-ons.
Bad actors have fattened their wallets with insurance money for years, seemingly with impunity. AOB home-repair abuses are literally spiraling through the roof, they’re so lucrative.
Luckless Floridians — thousands of them — are on the hook for higher homeowner premiums and often poorly done home repairs.
Consider a few reasons to be alarmed …
• Premiums will soar more than $335 for many homeowners in the Miami-Dade area by 2022;
• Frequency of water claims has spiked 44 percent since 2015. Severity has increased nearly 18 percent; and
• AOB lawsuits rocketed from 405 in 2006 to 28,000 in 2016. That’s a 6,800-percent increase. Florida’s unusual “one-way lawyer fees,” requires insurers to pay legal fees when they lose in court. This twist encourages collusion between contractors and lawyers to file more lawsuits, and may spur some insurers to settle suspect claims quickly.
The debate over tamping down AOB abuses has reached a crisis tipping point in Florida. The statehouse is debating competing reform bills. Insurers and lawyers, especially, are throwing their weight behind separate bills that would achieve widely different reforms.
Tallahassee must stop the gouging now. A good AOB reform bill passed the House, but prospects are dim in the Senate. Sure, it’s just a brief 60-day session. Yet homeowners are hopping mad. They demand relief, not excuses. With elections coming in November, Tallahassee owes besieged homeowners nothing less.
Matthew J. Smith is director of government affairs and general counsel for the Coalition Against Insurance Fraud.