As this is my first blog, I will assume no one has seen the recent policy changes that Citizens Property Insurance Corporation has just approved to their 2016 policy to curtail water damage claim costs. Some of the highlights are limiting coverage for emergency services and temporary repairs to an amount between $2,500 and $5,000 prior to reporting of the loss, additional coverage for emergency services will be available following Citizens approval; repairs after hurricanes would not be subject to this limit. Another change would be “[r]equiring reports of losses to Citizens within 72 hours of “when the insured knew or should have known that the loss occurred.” Also possible is not covering for age-related deterioration of plumbing systems. These are three significant changes because they affect Homeowners, mitigation, and restoration companies throughout the state of Florida.
So, what does this all mean? Well nothing as of yet, as all policy changes, even though the insurance company may want to change the policy immediately, it must be approved by the Office of Insurance Regulation. Once approved by the Office of Insurance Regulation then things start to change. Restoration and mitigation companies could have their bills cut to a fraction of what they were and/or Homeowners may be stuck with the bill. However, it is possible that these companies can still get an assignment of benefits under Coverage A of the insurance policy and claim the repairs under a different provision of the policy; as the repairs are still a consequence of the loss. Another course of action the Homeowner, restoration, and mitigation companies could do is nothing. The industry can continue its current course of action and claim ambiguity in the insurance policy as the new reasonable repair provision conflicts with the provisions under Perils Insured Against, which covers damages caused by a sudden and accidental discharge or overflow of water as the work done is completed to benefit the Homeowner as much as the insurance company like the courts found in City of Laguna Beach v. Mead Reinsurance Corp., 226 Cal. App. 3d 822 (Cal. App. 4 Dist. 1990) and McNeilab, Inc. v. North River Ins. Co., 645 F. Supp. 525 (D. N.J. 1986).
One thing these new policy provisions overlook is the opposing duties placed on the Homeowner. Homeowners will still be required to protect their home from further damage, yet they will only have a certain amount of money to do the necessary mitigation. As such, if the work to prevent mold from developing in the home costs $7,000, will the Homeowner be required to front the other $2,000? What if they do not have the money? Will Citizens reimburse the Homeowner? This should bring many consumer advocate groups to reach out to the Office of Insurance Regulation to not allow these changes.
For more information about the possible changes to Citizens’ policy please see this link. https://www.citizensfla.com/shared/press/articles/188/12.09.2015.pdf and http://www.insurancejournal.com/news/southeast/2015/12/09/391379.htm
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