Will this be the year lawmakers reform the water damage repair sector?

For the last three years, efforts by state lawmakers to pass reform measures targeting fraudulent conduct on the part of contractors retained by homeowners to repair water damage attributable to non-meteorological causes have failed to gain the necessary traction in Tallahassee.

Indeed, recent reports indicate that this year’s attempt to more forcefully regulate the process by which homeowners effectively sign over the benefits of their insurance policies to water damage contractors may soon meet the same fate thanks to a few fundamental differences in the versions introduced in the Senate and House.

In general, both versions of the insurance reform measure call for the following:

  • Contractors must include warnings in their contracts indicating that homeowners understand that they are signing over certain rights under their policy and that they may cancel the arrangement within three days of singing.
  • Contractors must inform insurers within three days of the homeowners signing over their right to payment for work performed in connection with a claim.

Where the two bills differ, however, is that while the House version limits the reimbursement for emergency repairs to $2,500 and bans contractors from taking action against the homeowner if the insurer doesn’t cover the work (i.e., reporting the matter to a credit agency, filing a lien, filing a lawsuit, etc.), the Senate version provides no such protections.

These differences were enough to cause officials with the Florida Office of Insurance Regulation to indicate that they did not support the Senate version, something that may explain why the bills are currently stalled.

It’s worth noting that the Florida Association for Insurance Reform has gone on record as supporting an alternate bill, sponsored by Rep. Doug Broxson (R-Gulf Breeze), calling for contractors to supply itemized estimates for water damage services and essentially banning them from paying referral fees to plumbers who recommend their services to homeowners.

It will be interesting to see if this is the year that something is finally accomplished in this area. Stay tuned for updates.

If you have questions or concerns regarding an insurance law matter, please consider contacting an experienced legal professional as soon as possible.