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Steep Increase in Water-Loss Claims in South Florida Keeps Local Insurance Rates from Lowering

Pekar Law, P.A. Oct. 18, 2015

Why Aren’t South Florida Customers of State-Run Citizens Property Insurance Company Saving the Same Money as Customers in Other Parts of Florida?

There is a simple reason that South Florida customers of the state-run company, Citizens Property Insurance, are not reaping the benefits of lower premiums next year that their peers in other parts of the state are: the steep increase in water-loss claims in Miami-Dade County. According to the insurance industry and supporters in the state legislature, this steep rise in claims is largely due to fraudulent activity.

Citizens has made the decision to hold South Florida policyholders responsible for the sharp increase in claims in their region. Citizens takes the position that rates would have decreased for property owners in Miami-Dade, Broward and Palm Beach Counties if not for the “disturbing rise” in claims for water damage and resulting lawsuits.

If the rate changes proposed by Citizens are approved during the next few weeks by the Office of Insurance Regulations, policies assigned to multi-peril single-family homes will increase by as much as 2.9 percent in the affected counties. The apparent inequity here is that this will occur despite the lowering of insurance rates throughout the rest of the state./p>

Statistics help to clarify the origin of the conflict. Where one in 12 policyholders in Miami-Dade filed a water damage claim two years ago, last year the proportion jumped to one in eight. According to the CEO of Citizens, 90 percent of the company’s water damage claims originate in this county. There does not appear to be any clear-cut reason for this geographical imbalance relative to climate, age of real estate, or method of construction. Therefore, the discrepancy appears to be the result of fraudulent activity.

There is evidence that some plumbers responding to emergency calls in the area receive finders’ fees if they recommend homeowners contact certain water loss restoration companies. Such companies then require homeowners to assign forthcoming insurance benefits to them before beginning restoration, filing lawsuits for inflated claims.

For more than 3 years, in spite of the apparent spike in fraudulent claims, attempts made to pass legislation to restrict a homeowner’s ability to sign over benefits to restoration companies have failed. Attorneys who oppose such laws maintain that the right to assign benefits is constitutionally protected.

Are you having a problem with insurance claims in the state of Florida? If so, our skilled and knowledgeable attorneys at Pekar Law are available to give you the attention you require. Please call us.