Are you covered? Do NOT make these mistakes...

Policies containing “election-to-repair” or “preferred contractor” endorsement language are NOT preferable...let me explain why.

Many of Florida’s main property insurance carriers have adopted language in their policy to create an alleged right to “repair” or to invoke an “election to repair,” the damages at issue, by a preferred contractor of its sole choosing. While this may seem innocuous, problems very oftentimes arise during the process that takes all discretion away for the homeowner, result in subpar repairs and the causing of further damage to the home.

Sadly, carriers such as People’s Trust and Citizens have this kind of language in many of their policies and have used it to force insureds into allowing a preferred contractor of the carrier’s sole choosing to access their home and perform repairs of unknown scope, nature and extent; rather than simply issuing fair payment to the homeowner to make necessary repairs themselves. This far overreaches the bounds of requiring consumers to abide by routine matters such as mitigating their damages and submitted sworn proofs of loss forms, in order to comply with applicable “duties after the loss”.

In fact, unbeknownst to most policyholders, if a loss occurred causing damage to their home, they may actually not recover anything in terms of compensation from the carrier to make repairs. Instead, companies like People’s Trust and Citizens may likely respond to a claim with information that no payment will be issued-but rather, the carrier will be exercising its alleged right to repair the damages, using a preferred contractor of its sole choosing, in lieu of paying.

Again, unbeknownst to most consumers, the “preferred contractors” are usually part of a much larger problem, which is systemic and far-reaching. The same contractors become part of a carrier such as People’s Trust, Avatar, or Citizens’ “Preferred Contractor Repair Network Program,” and then are consistently rewarded with more jobs, despite the quality of services they provide is sub-par and violative of professional duties of a licensed contractor to perform construction in a workmanlike manner that also complies with the Law, Policy, building codes and local laws/ordinances such as permitting requirements.

Carriers may oftentimes seek to compel it's insured to allow the repairs and execute necessary work authorizations related to the same; sometimes resorting to actually suing their customers to achieve this. In the past, carriers were not always successful in filing legal action seeking declaratory relief as to its rights under the policy, with regard to this issue.

However, On April 15, 2020, Florida’s Third District Court of Appeal held PTIC stated a legally sufficient cause of action for declaratory relief against its insureds under a homeowner’s insurance policy. (People’s Trust Ins. Co. v. Franco, No. 3D18-2178, 2020 WL 1870361 (Fla. 3d DCA April 15, 2020) The underlying case tests an insurer’s right to enforce an “election to repair” policy provision and the insured’s right to repudiate that election under the policy terms and conditions. The Third DCA did not render an opinion on whether People’s Trust would be successful in proving the allegations contained in the complaint. The Court found that the carrier was entitled to a determination of its rights under the policy, with regard to enforcement of the preferred vendor endorsement (a.k.a. E023 Endorsement) and reversed the trial court’s dismissal of the carrier’s complaint.

It remains to be seen what ramifications this case law will have on important issues involving policyholders, property insurance carriers, and preferred contractors. In the meantime, it is important to have quality advocates, such as the attorneys at Kowzan Law, in your corner to observe the propriety of the actions and decisions of the insurance company, during the handling of the claim and possible pursuit of remedies such as compelling you to allow repairs by a contractor of the carrier’s sole choosing.

Insurance companies are notorious for making “mistakes,” insufficient claim investigations, and poor decisions. Therefore, opportunities may exist to argue that it is not entitled to detrimentally enforce portions of the policy (or the policy as a whole) against a given insured due to the existence of factors such as waiver and failure to comply with statutory requirements applicable to property insurance carriers in the State of Florida. 

If there is any question or concern regarding your rights under your property insurance policy, please contact the caring and qualified attorneys at Kowzan Law.

We would be happy to review your policy and otherwise assist during the oftentimes difficult claims process and potential resulting litigation that may be needed to protect your family’s rights.