UPDATED: Sept. 12, 2017 (Original post Sept. 15, 2016)
TALLAHASSEE – Homeowners beware! Unscrupulous contractors are conning residents into surrendering their home insurance policy claim rights and benefits. In the wake of Hurricane Irma, these instances are sure to grow.
Here’s how it works:
1) You get a contractor to agree to repair your home damage.
2) The dishonest contractor convinces you to transfer an Assignment of Benefit agreement in the contractor’s name.
3) The contractor then uses this to overcharge the insurance company and you lose all control of your claim.
“After Irma, if a repair offer sounds too good to be true, it probably is and could be fraud,” said Florida Chief Financial Officer Jimmy Patronis. “Opportunistic scammers may attempt to defraud Floridians following this disaster, and I encourage all Floridians to be vigilant in guarding against fraud.”
“Consumers should carefully read every document they are asked to sign, and they should ask specifically whether they will be personally responsible for making repair payments, or if their insurance company will make the payments directly.”
Patronis urged Floridians to report suspicious activity ASAP by calling 1-877-693-5236.
The result of these shenanigans? Skyrocketing home insurance policies statewide. First, if the insurer denies the claim, the contractor litigates, and those costs (into the tens of thousands, per recent report) get passed onto consumers. Additionally, policyholders assume the costs for inflated work claims. In 2006, there were 405 assignment of benefit lawsuits across all 67 counties in Florida and in 2016, that number had risen to 28,200, according to the Florida Office of Insurance Regulation.
There were three bills in the state legislature addressing this issue in the 2016 session; none made it out of committees. (The Palm Beach Post wrote an editorial about this rampant fraud.)
The Assignment of Benefit was designed to streamline the process for homeowners to get the repairs they needed quickly. Sadly, scam artists use it as a tool to walk away with hundreds of thousands of dollars. So the hurricane victim is again victimized.
Read these news articles posted before and after Irma:
- Insurers beg customers not to sign over claims rights after Hurricane Irma (Sun Sentinel)
- Florida must tackle insurance ‘assignment of benefits’ problems (Orlando Sentinel)
- Tampa Bay is ground-zero for assignment of benefits cases over broken auto glass (Tampa Bay Times)
- Knock, knock. Who’s there? It could be a hurricane insurance scam waiting to happen (Miami Herald)
What can homeowners do to protect themselves?
- First stop should be the state’s Hurricane Irma resource page.
- Read about Assignment of Benefits on the state Office of Insurance Regulation’s page.
- The Florida Bar Association is offering free legal assistance for Hurricane Irma survivors.
- Notify your insurance company first. Insurance policies require prompt reporting of claims, so it is important to act as soon as possible.
- While making temporary repairs, obtain the licensing or training credentials of all vendors who will be conducting work before signing any agreements. Check myfloridalicense.com to make sure the company has a current state license.
- Fully review all documentation you are asked to sign and ask questions to make sure you understand the agreements you are signing. Ask specifically who is responsible for paying the vendor, you as the consumer or your insurance company.
- If considering the assistance of a public insurance adjuster, ask for identification to verify that the adjuster is licensed. To verify the license of any Florida insurance agent or adjuster, utilize the state licensee search here.
- Understand how much a public insurance adjuster charges as well as what services are included before signing any contract.
- If you suspect fraud or suspicious activity, call the Department of Financial Services, Division of Consumer Services Insurance Consumer Helpline immediately at 1-877-693-5236. Your concerns will be promptly referred to insurance fraud investigators.
The state has prepared an Emergency Financial Preparedness Toolkit to make information easier to access after a weather event. Download here.
Citizens Property Insurance Corp., the state legislature created non-profit alternate insurer, examined the cost of Assignment of Benefit abuse. You can read that report here. The largest amount of abuse in the Southeast Florida.