This is exactly what you guys are talking about now. This needs to stop. The litigation (issue) is true, my parents in West Boynton have an old roof, and (a roofing company) went to bat for them. Its costing them 70k to get their roof replaced, took about a year of litigation. So that same roof would probably cost 1/2 that without getting lawyers involved. It's good for them to get the roof, they need it. But this is one case of many. The courts need to distinguish between true hurricane damage, and a roof that's 30 years old and needed to be replaced anyway. Somehow, they are siding with the homeowners on a lot of these. They are giving away 'free' roofs that were already old and needed replacement, and then the rates go up.
Bottom Line: Your example is a quintessential example of the types of flaws and abuses which have been pervasive in Florida’s property insurance market. Specific to roofs – which is the single biggest claims issue within this state. The bills being advanced in this week’s Special Legislative Session specifically address the example you presented and the rampant abuses by attorneys who have being raking it in at the expense of almost all Floridians. And about that...I’m aware property insurance talk isn’t the most exciting, but the reason I’ve made it such a point of emphasis this year is because there are few state issues which have a more pervasive impact on Floridians than this one. What’s the top issue in Florida right now? Affordability, right? And aside from the immediacy of gas prices and related inflation, housing affordability – from sky high rent rates to the cost of making a mortgage payment are the biggest concerns. One of the most expensive “hidden costs” of living in Florida is the property insurance crisis.
Literally the only Floridians who aren’t negatively impacted monthly are those who own their properties outright and self-insure. This means rent rates and mortage payments alike reflect the huge costs associated with Florida’s property insurance issues. And specific to the litigation situation you described, your estimate of the year long legal slog costing twice as much, is probably understated. As I cited earlier this year... The biggest “winners” in all of this in recent years have been...the attorneys. 71% of all litigation money “recovered” has been going to attorneys. Basically, the entire Florida property insurance market is screwed – along with all policy holders – because slimy attorneys have been able to connect with often less than honest homeowners to create a honeypot for the slimy attorneys.
The result has been a net loss for the Florida property insurance industry for three consecutive years. That’s despite the already huge increase in premiums. It’s what’s led to numerous insurance companies failing, others lessening their exposure to Florida and the surge in Citizen's policies. And what does this mean to you specifically?
- The average Floridian pays $680 more for property insurance annually due to lawsuits
That’s $680 per home per year simply to account for legal proceedings. With an average policy cost now exceeding $3,500 per year, approximately 19% of all property insurance premiums go into the pockets of attorneys. This is why the this has been such a point of emphasis in my coverage of the crisis. People will often say there aren’t any immediate savings that can be expected. I say that’s BS. If we eliminate the legal abuses in the system, there’s the opportunity for double-digit savings right away. But then there’s the piece about insurance claims being abused for routine maintenance. Almost all of that is derived from the example in your parents' situation. Roofs.
It’s been readily discussed that Florida has about 8% of property insurance policies but about 79% of the property insurance litigation – which once again speaks to what I was just discussing, but almost all of the abuse is specifically derived from roof repairs. Over the past three years 80% of Florida’s property insurance claims are for “roof repairs”. So in addition to litigation reform, getting adequate roofing reform has the potential to eliminate most claims. And this takes us to what’s being considered in the Special Legislation Session right now.
The two bills being advanced are aimed at reforming these two key areas. The first bill entitled: Property Insurance, focuses on litigation reform in addition to providing an optional roof deductible system for future policies. This proposal accomplishes a few reforms:
- Significantly limits attorney fees
- Lawyers wouldn’t be able to receive direct financial incentives from contractors who’ve been assigned benefits
- Creates an optional roof deductible
All of these are helpful. Much less financial incentive for attorneys will make fewer of them willing to engage in the behavior of suing insurance companies. Lawyers only being able to be compensated directly from legal findings as opposed to essentially receiving kickbacks with contractors who’ve been assigned benefits will likewise limit the financial incentive for attorneys. Additionally, it should rein in the AOB practices/abuses by many contractors as well. And by creating a separate roof deductible, there will be greater insurance flexibility for carriers allowing those who don’t file roof claims to benefit from lower costs. The other bill entitled: Roof Repair, Replacement and Recovering Requirements - would amend Florida’s building code to state that whole roof repairs aren’t needed when damage is present. That could clearly result in cost savings with authorized repairs as necessary, as opposed to whole roofs being replaced routinely.
Should these bills survive the week as constructed I’m optimistic that Florida will have finally meaningfully moved the needle with real reforms which will make a meaningful difference. And as I mentioned on Monday, a key tell as to if we’ve accomplished that – whether the slimy attorneys are screaming or not. I’ll be watching and listening.
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