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Your home flooded in a sudden downpour? Who ya gonna call next?

Tue Apr 15th, 2014 on     Homeowners Insurance,    

There are times when a review of pending legislation about insurance makes us think of the ’60s cartoon, “Underdog.” Our hero saved people from perilous situations with a cry of, “There’s no need to fear! Underdog is here!” The insurance industry has your back, Florida.

We have been talking about assignment of benefits to cover emergency mitigation. A homeowner is faced with, in our example, a flooded family room. He calls in a cleanup company to move everything, to help dry the place out, to tear up the carpet and sanitize everything; he has just incurred expenses for emergency mitigation services. As we explained, the homeowner can assign his insurance benefits to the cleanup company.

In one of the many proposed bills the Legislature is considering, there was, for a while, a provision that would have added a couple of steps to that process.

Under this provision, the homeowners insurance company would only accept an assignment if the cleanup company notified the insurer within 48 hours. The written agreement must limit the assignment to the work to be performed, and that work would have to comply with any repair guidelines included in the homeowner’s policy as well as industry standards.

The agreement must also describe the estimated scope and price of the work before work begins, and the homeowner must approve any deviation from these estimates. The agreement must prohibit the cleanup company from charging the insured more than his deductible.

And a note to the policyholder: In our hypothetical, the cleanup company (or person) must be certified under the “most recent Standard and Reference Guide for Professional Water Damage Restoration, as developed by the Institute of Inspection, Cleaning and Restoration Certification and approved by the American National Standards Institute.” In the alternative, the cleanup company must have a valid Division I license under chapter 489 — that is, the company must be a licensed general contractor, building contractor, or residential contractor.

In one version of the bill, the cleanup company would also be prohibited from charging the homeowner for anything after the assignment had been made. It would also prohibit the company from holding onto funds paid by the insurer to cover the services of a vendor or subcontractor.

The truth is that scammers will take advantage in a disaster. Homeowners along the East Coast learned this after Hurricane Sandy. The work was shoddy, the charges were too high — it has been a serious issue since the storm hit.

But homeowners looking at this proposal would have to wonder how the provisions in the assignment agreement would protect the policyholder more than they would protect the insurance company. And that may be why the proposal is not included in the bill that will go to the Senate floor for debate.

Source: The Florida Senate, “Bill analysis and fiscal impact statement: SB 708,” The Committee on Appropriations, March 17, 2014

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