As unsuspecting Florida homeowners scramble to file insurance claims, assess temporary repairs, contact emergency mitigation servicers, and hire mold remediators after disastrous leaks, the last thing they want to find out is that the insurer is invoking a “right to repair” clause in the policy. This policy term provides the insurer an option to either pay for the loss or repair or replace the property with their own vendor.
Insurance companies invoke the right to repair as leverage to reduce the scope and price of damages a property owner has legitimately suffered. The insurer generally has no vested interest in ensuring that the repairs are conducted safely, appropriately, and comprehensively. But the insurer does have a distinct and pointed interest in reducing their expense by undercutting their insured. Right to repair clauses are commonly invoked in one of two ways – requiring that a “preferred contractor” perform repairs, who has negotiated directly with the insurance company render wholesale services at a discount OR rely upon the shortchanged proposal that “preferred contractor” would allegedly issue to perform repairs.
By doing so, the insurer intends to deprive an insured of any and all control or involvement in repairs. Since the insurer is paying the contractor, the contractor has no incentive to perform satisfactory repairs – and the substandard work routinely performed by preferred contractors prove that. But property owners have rights too, even in this forced scenario. Florida law makes very clear that homeowners have the right to demand that repairs are done properly and with quality materials. Florida homeowners may demand a full plan of repairs that outlines the scope of the work, specification of materials used, and confirmation that repairs will meet all relevant building codes. Homeowners also have a right to make sure that contractors clear background checks before they enter the home, utilize surveillance technology to oversee the work, and confirm that hours align with the insurer’s labor estimates. A failure from the “preferred contractor” to meet any of these expectations amounts to the insurance company’s breach of the policy.
To further complicate an already uncomfortable situation, the not-for-profit, tax-exempt, government entity, Citizens Property Insurance Corporation has sunk their claws into this approach. Citizens recently implemented a $10,000 water damage limit on homeowners’ policies, which can only be negated if you agree to allow Citizens’ preferred contractor to make repairs. Of concern, the Florida Legislature passed Florida Statute 627.351(6) in 2002, which enabled Citizens to provide insurance for applicants who cannot procure insurance through the voluntary market. The legislature mandated that Citizens’ income “may not inure to the benefit of any private person.” Is payment to a third party contracting company for the repair of damaged property not a violation of that statute?
We implore property owners in Florida to consider the issues raised by the commonly invoked “right to repair” clause. While insurance companies feel entitled to impose unfair conditions upon their insureds, experienced legal counsel can review your policy and assess what specific rights and remedies a property owner may have when confronted with this strong-armed strategy by the insurance company.