Spike in lawsuits may push homeowners insurance rates up

Assignment of benefits lawsuits have skyrocketed, prompting claims of abuse

By Mike Vasilinda - Tallahassee Bureau Chief

TALLAHASSEE, Fla. - When you go to your doctor, most people sign a form allowing the doctor to bill the charges directly to their insurance company, if they are lucky enough to have one.

The same thing often takes place when it comes to home repairs, with homeowners allowing a third party, such as a roofer or plumber, to file a claim on their behalf and seek direct payment from an insurance company.

It's called assignment of benefits, or AOB.

Florida homeowners insurance rate projections

These five-year projections for Northeast Florida counties are based on the filed/approved rate changes for 15 large insurance companies writing this coverage in Florida, excluding Citizens Property Insurance Corp. The numbers are for $150,000 pre-2001 homes with mitigation.

For more counties and various risk types, click here.

When an insurance company balks at repair costs, contractors sue, and the number of AOB lawsuits has skyrocketed, from 400 a decade ago to more than 40,000 this year.

The spike has drawn claims from insurance regulators that the contractors are abusing the system, and the state's insurance commissioner said those lawsuits are going to cost homeowners more soon -- a lot more.

"Rate increases could be as much as 10 percent if this is unaddressed," Florida Insurance Commissioner David Altmaier said.

The problem is primarily in South Florida, but is spreading north. 

DATA: County-by-county rate increases

On average, the owner of a new $150,000 home will be paying $65 more for insurance next year and then $68 more than that by 2019. By 2022, the average insurance rate will be  $362 more than the homeowner is paying this year.

The spike is even more for pricier homes. By 2022, the owner of a new $300,000 home will be paying $658 more a year in insurance than they are this year.

The increases for Duval and Clay counties are above the state average. Insurance for a new $150,000 home will go up $392 by 2022 in Duval County and $379 in Clay County. St. Johns County is slightly below the average, going up $354 by 2022 for a new $150,000 home.

The increased rates for older homes are also dramatic for local counties. Insurance for a pre-2001 home worth $150,000 will go up around 30 percent by 2022 in Clay and Duval counties and will increase about 23 percent in St. Johns County in that time.

Jeff Grant, of the Florida Association of Restoration Specialists, has been calling for his industry to be regulated.

“I think it’s manufactured crisis,” Grant said. "I think if you regulate us, [that] gets rid of all the riffraff in our industry. You have to be background-checked, and the majority of these issues goes away."

In addition to water remediation and remodeling contractors, insurance regulators say they are seeing fraud in windshield and roofing repair.

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