How many of the 95,000 lawsuit claims against home insurance companies are fraudulent?
Written By: Krysty Hernandez
A big home insurance crisis is currently happening in Florida, and many are wondering if there will be a collapse in the insurance market. Recent legislative changes have stabilized the market, but only time will tell if that somewhat fixes the problem. Many of these property insurance companies have closed, liquidated, or decided they no longer want new business here in Florida. This doesn’t leave many options for homeowners when it comes time to renew. The rates have also increased astronomically. According to Gabriel Marrero, an account executive and expert at Goosehead Insurance at the Pinto Agency in Miami, Florida, he has seen some homeowners policies double in comparison to what they were paying a year ago. In a recent article from Islander Media Group, the current average premium for homeowners policies in Florida is $3,643 with a $1,000 deductible, and the home is valued at $300,000 in Miami-Dade homeowners are paying an average of $7,000 a year for the same home value.
Many of these home insurance companies are being liquidated or have pulled out of the state of Florida for various reasons such as storm risk, roof age, and insurance fraud. In a recent article for Bankrate, Logan McFadden, Florida’s Vice President of State Government Relations, was quoted as saying
“Florida’s property insurance market is in a crisis as insurers grapple with out-of-control litigation costs and billions in losses from recent natural disasters.”
According to the office of Governor Ron DeSantis, homeowners in Florida make up only 9% of the country’s home insurance claims, but Florida makes up 79% of the country’s home insurance lawsuits take place in Florida. In July, the Florida Office Insurance Regulation released its stability report with data collected from the National Association of Insurance Commissioners (NAIC) Market Conduct Annual Statement (MCAS). According to the MCAS, as of 2021 the percentage of Nationwide homeowner’s claims opened in Florida was 7.03% and the percentage of ongoing lawsuits filed against Nationwide is 76.32%.
Now many insurance companies, are claiming that most of these lawsuits are fraudulent. Insurance companies claim that roofers and independent claims adjusters are scouting neighborhoods and offering inspections to homeowners, especially after a torrential rainstorm or a tropical storm has hit the area, and claiming they have “found damage” on the roof and promise can promise a “free roof” ‘to the homeowner without a home insurance deductible. There have been several arrests across Florida due to these insurance fraud schemes, for instance, this year it was reported that the owners of Webb Roofing and Construction, Brian Webb, and Brandon Jourdan were arrested and charged with nine counts of fraud and doing just that. They were promising homeowners new roofs with no deductible as long as the homeowner submitted a full roof replacement claim to their insurance company and had signed over their rights to Webb and Roofing and Construction. In Miami back in 2019, The Miami Herald reported on an Insurance-fraud ring that was filing phony claims on homes across Miami-Dade county.
When there is damage caused to your home due to a severe storm, you can file a claim with your home insurance, but many homeowners are hesitant to or wait to file a claim because they haven’t passed their deductible. Marrero says the problem is that
“most homeowners have a five percent hurricane deductible, which can be anywhere between $10,000 to $15,000, and if you haven’t passed your deductible, you can’t file a claim.”
When an adjuster promises a homeowner a new roof and their insurance deductible waived, many homeowners feel pressure to sign an assignment of benefits form, giving these adjusters and contractors the right to file an insurance claim on their behalf. Many of these roofing companies or adjusters tend to do a sales pitch by showing how much money they won for their previous clients or neighbors, which gets the homeowners to sign away their rights. Because these adjusters are going door to door or neighborhood by neighborhood, they are flooding the insurance companies with claims. The insurance company has 90 days to respond to the claim. If the claim is deemed worthy of review, the insurance company sends their own adjuster to inspect and determine the level of damage, and the insurance company will then either approve the claim but only pay out for what they think is reasonable, or simply deny the claim. The payout is usually less than what independent adjusters have requested, so they bring legal action against the insurance company. The insurance company now has the choice of paying legal costs to fight the lawsuit or paying the costs to settle out of court, either way, they are losing money. This is evident that there are fraudulent claims being filed but what about those homeowners filing legitimate claims and getting denied?
In 2021 there were over 95,000 lawsuits claimed against homeowner insurance companies. So out of the 95,000 lawsuits how many were fraudulent and how many were not? Currently, there is no data being collected to determine which lawsuits are fraudulent and which are clients that have not accepted the payout of the claim they have filed themselves. Property Attorney Chris recently told reporter Michael Hudak for WINK,
“Yeah, there are some frivolous lawsuits. But for the bulk part of it, they’re not. They’re just denied claims. It’s a numbers game for the insurance company, if they deny 10 claims, maybe one gets awarded.”
