The Office of Insurance Regulation just approved policy language changes for Citizens policyholders. The new policy language is meant to encourage prompt notice of loss and to specify requirements regarding emergency measures and permanent repairs. These policy language changes will be implemented for all new business and renewal Homeowners (HO-3), Unit-Owners (HO-6), and Dwelling Property (DP) policies effective after July 1, 2016.
These changes are a result of the rising number of fraudulent Assignment of Benefit claims that Citizens has been receiving recently. As mentioned in our 6/24/15 blog, Water Damage… The New Sinkhole these claims involve a 3rd party (i.e. a plumber or mold remediator) who has an insured sign over their claims payment rights in order to fix a problem (i.e. a plumbing leak) at the insured’s home. These third parties are then inflating the costs and demanding payment from Citizens and other insurance carriers, and the carriers either have to pay the inflated claims or fight the claims in court (for possibly a larger cost).
The first policy language change is the revision of Reasonable Repairs, now entitled Reasonable Emergency Measures. The insured is still required to take reasonable emergency measures for the sole purpose of protecting the property from further damage after a loss, but those measures are now limited to the greater of $3,000 or 1 % of the Building limit, unless approval is received by Citizens. Measures taken may include permanent repairs if necessary to prevent further damage or prevent unwanted entry of the property. Finally, the new language encourages the insured to have Citizens analyze the damage if reasonably possible.
The second change is regarding loss reporting. Policyholders must still give prompt notice of claims to Citizens, but now there is no coverage for permanent repairs that begin before any of the following: 72 hours after the loss is reported to Citizens, the loss is inspected by Citizens, or verbal or written approval is provided by Citizens. The only exception is measures taken to prevent further damage or to prevent unwanted entry to the property
As a policyholder you will receive documentation of the changes with your renewal policy. Citizens has also made available a claims brochure with basic info you need to report a claim. We encourage our policyholders to contact us directly after a loss so that we can help you report the claim and assist you through the entire claims process.
As always if you have an questions, please contact your agent or email Brian Ford at BFord@InsuranceResourcesLLC.com