Why is citizens insurance disputing water damage claims?
In yet another contentious lawsuit involving Florida’s Citizens Property Insurance Corporation, a major rift has developed between several South Florida homeowners and their insurer – particularly concerning allegations of fraudulent claims by several insureds claiming widespread water damage.
Citizens contends attorneys and advisors – predominantly in the South Florida area – have induced homeowners to make claims of water damage following burst pipes, requiring a massive cleanup effort and the engagement of water damage cleanup firms. The company argues that the claims are completely fraudulent, and designed to bilk the company out of unnecessary and unsupported payouts to the detriment of policyholders with legitimate claims.
In response to the allegations, insureds are rebutting the fraud claims by stating that Citizens has merely run out of reasons for the water damage claims, and policyholders have made no greater claims within South Florida than elsewhere.
However, counsel for the insurance company recently compiled data concerning all claims made in 2014 – 56 percent of which derived from non-weather related water damage. Of this group, 72 percent of those claims occurred in the tri-county area of Miami-Dade, Broward and Palm Beach. In just December, 2014, 98 percent of all claims filed by policyholders occurred in the tri-county area, and 92 percent of these claims involved non-weather related water damage.
In sum, Citizens alleges a “cottage industry” is burgeoning in South Florida involving fraudulent water damage claims – which as in turn resulted in a dramatic increase in rates for the tri-county area while the rest of the state’s rates have decreased. In rebuttal, insurance litigators point to the aging nature of homes in the South Florida area, as well as a strong correlation between policyholders making claims concerning homes built prior to the industry-wide conversion to PVC piping.
It remains to be seen how the fraud claims will hold up in court, particularly if policyholders can produce valid evidence of a legitimate claim.
If you are having issues with property insurance claims or need help with any type of dispute with an insurance company, you should consult with an attorney who has expertise in Florida insurance law.