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Homeowner

What Are Asssignments Of Benefits And How Do They Affect Homeowners?

How does Assignment of Benefits affect homeowners?  And what are the advantages to using one?

What are Assignment of Benefits

According to the Florida Department of Financial Services,

“an assignment of benefits, often referred to as an “AOB” is a legal tool that allows a third party to be paid for services performed for an insured homeowner who would normally be reimbursed by the insurance company directly after making a claim.”

Here is how AOB works and how they affect the homeowner

Let’s say that you have a pipe leak in your home.  Your homeowner’s insurance policy provides that you have a duty to mitigate the damage to your property.

So you call a plumbing company to fix the pipe leak and a water mitigation company to extract the water and dry out your home.

Instead of requiring you to pay them at the time that the services are performed, they have you sign a document assigning your right to benefits under your homeowner’s insurance policy and allowing them to bill the insurance company and have the insurance company pay them directly.

The law is clear that even when an insurance policy contains a provision barring assignment of the policy, an insured can still assign a post-loss claim.

Most of the assignment of benefits forms in use will allow the contractor to stand in the shoes of the homeowner for insurance collection purposes.

Assignments of benefits have recently become the subject of much debate

The insurance industry argues that assignments of benefits allow contractors to unilaterally set the value of a claim and demand payment for fraudulent or inflated invoices.

On the other hand,

“Contractors argue that assignments of benefits allow homeowners to hire contractors for emergency repairs immediately after a loss, particularly in situations where the homeowners cannot afford to pay the contractors up front.”

In 2015, the Florida Insurance Consumer Advocate’s Office asked the fifteen highest-writing homeowner’s insurance companies in Florida to begin tracking and reporting claims data information in an effort to determine the impact that assignments of benefits are having on Florida consumers.

In 2016, Citizen’s Property Insurance Corporation, the state’s largest property insurer, sought and was granted a 6.4% rate increase.

Citizens claimed the rate increase was made necessary by an increase in water loss claims.

During the 2016 legislative session, two bills were introduced in an effort to regulate this practice.  As Florida’s Chief Financial Officer, Jeff Atwater, recently said in his newsletter, Dollars & Sense,

“If you own a home in our great state, you’ll want to stay tuned to this conversation.”

We will, of course, be sure to keep you updated on changes in this important area of the law.  In the meantime, there are things that you can to help reduce the risk of fraud and keep homeowner’s insurance rates from rising further.

  • First, it pays to be prepared.
    • Ask friends if they can recommend a plumbing company and/or water mitigation company.
    • Check them out ahead of time so that you will know who to call in an emergency.  (See our previous blog post, “Finding a Contractor,” for helpful information on hiring and screening contractors).
  • Second, make sure that you read and understand the documents you sign and that they correctly reflect the work that was done and the equipment that was used.
  • Ask the contractor for a copy of the invoice that is being sent to the insurance company.
  • If the contractor refuses to provide one, call the insurance company and ask for a copy of the invoice they received.

By working together, we can help to make sure that legitimate claims are paid and fraudulent claims are not.

Should I Repair or Replace My Roof?

The short answer is you should replace your roof. Yes, it can be argued whether to repair or replace a roof depends on the extent of the damage. Some insurance companies even say that if most of your roof is still in good shape, you may be able to repair the damaged spot.

The reality is that if your roof has been compromised as a result of windstorm or hail event then you’re only placing a Band-Aid on the problem and will likely have additional roof issues in the near future. Additionally, when there are signs the roof is wearing out, or if it is close to the end of its expected lifespan, you are always better off replacing it.

The expected lifespan of a roof can vary greatly depending upon the type of roofing material used.  If you are not sure what type of roof you have, an experienced roofer can tell you.

If your home has an older roof, you should also keep in mind that there is a trend toward insurance companies tightening their underwriting requirements in areas like Florida where they have greater than average exposure.

Some insurers are refusing to renew existing homeowner’s insurance policies on houses with roofs older than 20 years unless they pass an inspection and some insurance companies are requiring the homeowners to cover the cost of these inspections.

Policies on homes that fail inspection are not renewed without a roof replacement.  Other insurers are refusing to write new policies for homes with roofs over 20 years old and are limiting liability under the policy to actual cash value to replace older roofs when they’re damaged.

This means they don’t pay to fully replace the roof, but only reimburse for what an old roof is worth after 20-plus years.  Although replacing a roof can be expensive, you may have no choice if failing to replace the roof means that you can’t get homeowner’s insurance.  (See “Why Should I Buy Homeowner’s Insurance.”)

If you check the condition of your roof at least once a year, you should be able to plan in advance for necessary repairs.  Moisture marks or brown stains on ceilings or walls, peeling paint on the underside of roof overhangs, damp spots alongside fireplaces, or water stains on pipes venting the water heater or furnace are all signs of a leaky roof.

When you inspect your roof; signs of trouble include cracked caulk or rust spots on flashing; missing shingles or shingles that are buckling, curling, or blistering; and worn areas around chimneys, pipes, and skylights. If you find piles of grit from asphalt roof tiles in the gutters, it means that the granules on your shingles are wearing down.

Black algae stains are not just cosmetic issues, masses of moss and lichen could signal roofing that’s decayed underneath.

If you’re inspecting your roof and find signs of a problem, especially if the roof is old or you suspect the damage occurred as a result of a storm with heavy wind or hail, or a recent tornado or hurricane, it is best to get a professional assessment.

Often, there’s a level of damage beyond what you are easily able to see.  Some roofing companies do this free; specialized roof inspectors, like those who work through the National Roof Certification and Inspection Association, charge about $175.

If something sudden and unforeseen, such as a wind storm, causes a leak to appear, your homeowner’s insurance will likely cover the repairs. But you’re still responsible for limiting the damage, so try to get a local roofer to spread a tarp while you arrange for repairs. Insurance may not cover your loss if you fail to mitigate the damages so be proactive a call a roofing professional to tarp your damaged roof.

How Can I Prevent My Pipes From Freezing And What Should I Do If They Do Freeze?

Freezing pipes: What to do and how to prevent them

We don’t get as much cold weather as they do in other parts of the country.  Most of us who live here in Florida live here because we like the warm weather.

We joke about palm trees and wearing shorts and flip flops in December, spending the holidays on the beach and having only one day of Winter.  We tease our friends and family in colder climates about our warm weather.

Also, because we are accustomed to the warmer weather, we tend not to spend as much time preparing our homes for Winter as those in colder, more northern climates are accustomed to spending.

But even here in Florida, we do have some cold nights.  I was reminded of this a short time ago when a beep from my cell phone announced that there is a freeze warning in effect for tonight.   This means that temperatures could get cold enough to cause your water pipes to freeze, and in some cases, burst causing water damage to your home.

But there are steps that you can take to prevent this from happening.

  • Disconnect and drain all gardening hoses and install covers on all outside faucets.
  • If you have a swimming pool, make sure that it is properly winterized. Consider hiring a professional.
  • Keep the temperature in the home at 68 degrees or higher, even if you are going to be gone from the home for an extended period of time.
  • Open cabinet doors below kitchen and bathroom sinks to allow heat from the home to circulate.
  • Wrap pipes closest to exterior walls and in crawl spaces with pipe insulation or with heating tape. In a pinch, even wrapping pipes in newspaper can provide some degree of insulation in areas that do not have frequent or prolonged freezes.
  • Close all windows near water pipes and cover or close open-air vents.
  • If you have a basement, heat your basement and consider weather sealing your windows.
  • Insulate outside walls and unheated areas of your home.
  • Allow water to drip from a faucet served by exposed pipes. Running even a trickle of water through pipes can help prevent them from freezing.
  • If you plan to be away from home for an extended period of time, shut off the water supply valves to your washing machine.

The first sign of freezing pipes is reduced water flow from a faucet.  If a faucet or pipe freezes, you can thaw it by heating water on the stove, soaking towels in the hot water and wrapping them around the cold section so the pipes or by using a hair dryer.  (CAUTION:  Do not operate a hair dryer around standing water.)

Make sure the faucet is turned on so that the melted water can drip out and start by thawing the part of the pipe closest to the faucet.

If a pipe does burst, shut off the main water valve.  If the break is in a hot water pipe, close the valve on top of the water heater.

Call a plumber and a water mitigation company, if necessary.  Most homeowner’s insurance policies require that you make reasonable repairs to prevent further damage or loss to your property and will even pay for these costly repairs as long as the damage was caused by a covered peril and the costs are reasonable.

Review your insurance policy and if you have any concerns regarding the coverage afforded by your insurance policy, consult an attorney experienced in the area of homeowner’s property insurance claims and insurance coverage disputes.

If you have questions about your insurance coverage or need help with your insurance coverage dispute, please contact us for a free no-obligation consultation.

Why Should I buy Homeowner’s Insurance?

You may have read or heard stories about people who pay for insurance policies,

sometimes for years, only to have the insurance company deny their homeowner’s insurance claim and cancel their policy when they have a loss.  So you may be asking yourself why you should buy homeowner’s insurance.

Insurance is a contract in which the insurance company, for a fee referred to as a premium, agrees to pay you for damage to your home or its contents caused by events which are insured against.  The written contract is usually referred to as the “policy” and the events insured against are referred to as “risks” or “perils.”  Insurance policies may be “all risk” and cover any peril not specifically excluded by the policy, or “named peril” and cover only those risks named in the policy.  The purpose of having homeowner’s insurance is to protect you and your family from loss in the event that one of the perils insured against occurs.  The insurance contract shifts the risk of loss from you and your family to the insurance company.  Everyone benefits as long as both parties act in good faith to fulfill their duties under the policy.

For most people, their home represents their single biggest investment.  To have to bear the cost of repairing or replacing their home would be a huge financial burden.  When you factor into the equation the windstorms, hurricanes, sinkholes, water and mold damage that are so common here in Florida, and it is definitely risky to go without coverage.  If you have a mortgage (and let’s face it, very few people are able to purchase a home without taking out a mortgage), the bank or mortgage company will require that you maintain homeowner’s insurance on the property.

If you have a mortgage and fail to purchase homeowner’s insurance, the bank or mortgage company will likely purchase insurance on the property since loan contracts usually require it.  This is sometimes referred to as “force-placed” insurance.  The premiums for force-placed coverage are very expensive and you get less coverage for the money than if you shop for coverage yourself.  The bank or mortgage company will pass these higher premiums on to you in the form of higher monthly mortgage payments.  If you fail to purchase homeowner’s insurance and the bank or mortgage company purchases “force-placed” insurance, you won’t get to choose the insurance company and/or agent that you will be dealing with if you have a loss.  It is far better and more cost effective to shop for coverage yourself.

When purchasing a policy, it is best to select a company with an A+ rating with A.M. Best.  Before binding coverage, make sure you know what is and is not covered.  If you have questions, ask your insurance agent.  And in the unfortunate event that you suffer loss or damage to your property and your insurance company won’t pay your homeowner’s insurance claim, call us at (386) 454-loss for a free no-obligation evaluation of your insurance coverage dispute.