Why Is Florida’s Homeowners Insurance Such A Catastrophe?

One of these laws is the "assignment of benefits," or AOB. This law allows a homeowner with any kind of ordinary property claim to turn the insurance claim over to a contractor instead of negotiating a settlement with the insurer.

The cost of these claims have almost tripled in South Florida as contractors took the ball and ran with it, according to the Florida Consumer Protection Coalition. And according to James Graganella, CEO of Capitol Preferred Insurance Co., a domestic state insurer, the number of lawsuits rose more than 700% from 2016 to 2019.

AOB "has really degenerated into a racket," said Gov. Ron DeSantis last year, calling on lawmakers to pass reforms.

The state did pass an assignment of benefit "reform package" in the spring of 2019 intended to curb the AOB abuse. But critics doubt it will help much, since the state's major law firms are profiting from it.

And what's even worse for insurers is another state law known as "one way attorney fees." Its intention is to shield policyholders from legal bills if they want to sue insurers for failure to pay or low-ball claims. But coupled with AOB, it's become a bonanza for both contractors and lawyers, according to spokesperson Mark Friedlander of the Insurance Information Institute in Florida, which represents property insurers.

Contractors can file massive insurance claims lawsuits, since they won't be on the hook for any legal costs, and lawyers can continuously add to their fees until the insurer settles. Even if the insurance company wins in court, the legal fees can wind up costing more than the win was worth.

Friedlander said that a tort reform package failed in the 2020 Legislature. The cost of claims is eventually, and almost always, passed along to the Florida home insurance customer. Meaningful tort reform is the only answer to Florida's insurance problems.

Naples resident Gray Poehler is a retired insurance agency owner.