Imagine receiving an unexpected
It’s the fear that
The strategy is to require homeowners to sign what is called a “payment instruction” and give contractors the right to bill insurance companies directly for their repair services. Sounds convenient, but what customers might not know is that by signing the document, they agree to pay any part of the contractor’s bill that is not paid by the insurer, even if the contractor assured them that the work would be covered by their policy.
The trend is the latest salute in an ongoing battle between contractors and home insurance companies in
Prior to 2019, many contractors specializing in water dewatering and roofing services required homeowners to sign what is known as an Assignment of Benefits, which allowed contractors to assume the lessee’s right. insurance to sue an insurer for claims. Insurers say this has fostered abuse.
Lawsuits against insurers have skyrocketed, as have insurance costs for all
As a result, the state passed restrictions and consumer protections in 2019 that were intended to curb abuse and runaway costs.
Insurers now argue that contractors are using a document called a payment instruction, also known as a direct payment authorization, and work authorization contracts to avoid complying with the reforms.
Insurers are calling on the state legislature to extend these assignment of benefits restrictions to all contracts authorizing repair of damage covered by property insurance.
Axelrod said she called
“The first thing the field supervisor asked was, ‘Do you have home insurance? I said ‘yes’ and he said’ They will pay for everything except the water heater and the installation. “
He handed her an electronic tablet and told her to sign her name in a box. Then, she said, he told her not to bother calling her insurance company. “He said, ‘I’ll call them.’ “
Later that night
Six weeks later, Axelrod received an invoice for
Axelrod said she was shocked at the amount of the invoice and asked for an itemized invoice. The services listed on the invoice left her shaking her head: most of the charges were related to the installation and use of the drying machines. But there was also
She was surprised to see the charges add up
Axelrod will not have to pay the Roto-Rooter invoice. After the
And she can use a
“Posting” reforms increase policyholder risk
Until the adoption of the transfer of benefits reforms in 2019, Axelrod might never have seen the itemized invoice that
During state legislative hearings on the reforms adopted in 2019, contractors and insurers blamed each other for increased litigation and costs. Contractors complained that insurers were watching their bills and generally offered to pay only a fraction of what was owed.
Insurers said many contractors and lawyers regularly submit fraudulent claims to get as much money as possible.
And while the reforms have been successful in reducing assignments, contractors have turned to Direction to Pay as a way to avoid the 2019 restrictions while still retaining the ability to bill insurers directly, according to insurers.
Consumers walked away with less protection
As a result, consumers who sign Direction to Pay contracts lose the protections built into the 2019 reforms, including immunity from contractor lawsuits and the right to receive a detailed estimate.
Axelrod said she wouldn’t have allowed
Under Direction to Pay contracts, customers only have three days to cancel employment agreements. Cession of benefits reforms allow 14 days to cancel.
Axelrod’s contract with
In addition, the cession of benefits reforms prohibit contractors from attempting to recover from clients any money not paid by insurers, including by filing liens on their homes or suing them in court. No such restriction exists under a payment order agreement.
Other unresolved shortcomings in the 2019 reforms put policyholders at risk, insurers say.
Contractors “can assign work to someone else without permission. They can keep the difference (of payment) if they outsource the work to someone else, ”Burt said.
The biggest problem, according to
In an email,
Although the contracts state that consumers do not subscribe to the benefits of their insurance policies, they operate in much the same way, allowing “a contractor to exercise control over an insurance claim. consumer, often to the detriment of the consumer, ”she said. .
Carter is calling on the legislature to extend the consumer protections passed for benefit assignments to management agreements payable and related contracts in the next session that begins in January. Its proposal includes a requirement that insurers send payments directly to the policyholder rather than the contractor.
“Policyholders may not know that payments have been made, the amount of those payments and the assignee / contractor may take the money and never complete the job,” she wrote.
Some consumers – not the majority – will keep their insurance checks after receiving them and scoff when contractors threaten to file a lien, he said. “I can’t collect that lien unless they sell the house, and sometimes there are 18 liens above mine,” he said. “At the very least, insurers should be required to put contractors’ names on checks. “
Detailed cost estimates, he said, are not always achievable when homeowners are faced with severe flooding and leaks that need to be addressed immediately.
While some reforms may be necessary, it is ultimately up to insurance companies to assess contractors’ bills, he said.
“Instead, the insurance industry‘s first response is always, ‘Let’s pass more laws,’ he said.
It remains to be seen whether the Legislature will address the issue next year. Insurance industry officials say they feel reluctance among lawmakers to tackle new issues after passing major reforms in two of the past three years.
© 2021 South Florida Sun-Sentinel. Visit sun-sentinel.com. Distributed by Tribune Content Agency, LLC.