Managed Repair v. Assignment of Benefits


Managed Repair v. Assignment of Benefits

Florida Insurers, including Citizens Property Insurance Corporation, are flocking to “Right to Repair” Managed Repair Programs claiming that to fight off fraudulent or inflated Assignment of Benefits (“AOB”) claims, insurance companies themselves must hijack their own policyholders’ claimsbefore anyone else can do it.  See, “Citizens negotiating managed repair program” by Ron Hurtibise, April 19, 2016, Sun Sentinel,   The two part series, Managed Repair – Buyer Beware, discussed the economic fallacies underpinning the concept of broad-scale Managed Repair – including how the homeowner (the real party in interest) is cut out of the repair/decision process and how it places potentially limitless liability back on the insurer for failed, inadequate, substandard, incomplete, or incompetent repairs.  Bottom line, Insurers presently reveling in Managed Repair short-term savings have the real potential to be subject to protracted and significantly more expensive supplemental claims and litigation.

Nevertheless, Insurers seem to have decided to combat AOB and frankly undermine homeowner representation by waging war through Managed Repair programs.  Such tactics can be boiled down to a simple and absolute truth: Two Wrongs Don’t Make a Right.  Homeowners should not be hostages caught in the middle of rival repairers both vying to usurp the homeowners’ rights and cut them out of the claims process like irrelevant collateral damage.  To the contrary, Homeowners, NOT AOB contractors or insurers, should be the ones making claims, hiring contractors, and repairing their properties.  While this lawyer agrees that AOB abuse is real and problematic, Insurers’ Managed Repair programs are NOT designed to protect homeowners from unscrupulous contractors – they are designed to give insurers control over those contractors.  Insurers through Managed Repair are simply engaged in classic combat – if you cannot get the legislature to act – hijack homeowners’ claims for yourself thereby cutting off supplies, freezing accounts, and starving AOB contractors out.  But, it will not work and homeowners caught in the cross-hairs are the ones who suffer – including suffering the loss of control over what happens in their own home.

Homeowners must remember or be reminded, Insurers are not in business to provide humanitarian relief; Insurers do not wear white hats; Insurers do not rescue homeowners in distress; rather Insurers make money for shareholders.  Put another way, Insurers, by their nature, are designed to market a product they hope homeowners never use, collect premiums, and pay as little out in claims as possible.  Yes, they provide a valuable product.  But, their mission is not benevolent and insurers themselves through the years have proven to be notorious for engaging in bad faith type conduct to protect their own self-interests.  This is why Florida enacted a first party bad faith statute.  See, Florida Statute Section 627.155.

That said, AOB contractors are possibly worse; taking advantage of Homeowners facing the crisis of a loss.  Homeowners should not be duped; AOB contractors may exploit their claims impacting Homeowners’ future insurability and premiums.  Most importantly, Homeowners CAN get remediation and repairs completed without needing to assign their claim.   Contractors do not need an assignment to get paid; a simple direction to pay is sufficient and the longstanding practice of reputable contractors throughout Florida.

So, does a Florida homeowner’s choice really boil down to the lesser of two evils?  The answer is Maybe Not Yet!  But then, how can Homeowners protect themselves from this hostage situation?  First, Homeowners need to determine whether their own insurance carrier is regularly exercising its “right to repair” and how best to protect themselves including moving their business to a different carrier.  (If Citizens gets approval for their Managed Repair Program some Homeowners will have no choice).  Second, Homeowners should insist that the Florida legislature make the “right to repair” optional and require it to be specifically selected by the insured when the Policy is obtained with full disclosure of what will happen if they accept “right to repair” and later elect to use their own contractor (denial of the claim; cancellation and/or non-renewal based on a breach).   And, finally Homeowners should NOT sign over their rights under any Policy in exchange for remediation or repairs.

Hurricane season starts Today!  Homeowners must do what they can now to avoid becoming Hostages in Florida’s hostile claims environment should a claim become necessary.