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New Legislation Means Lower Insurance Premiums For Florida Homeowners

By Tanya Svoboda
October 2019

Homeowners in Florida have been paying higher home insurance premiums than anyone else in the United States. The National Association of Insurance Commissioners reports that an average, annual home insurance premium for a Florida resident is $1,918. And that rate has been increasing rapidly, having climbed 25% or $384 since 2007.

The obvious culprit behind the increases are national disasters like Hurricane Irma and Hurricane Michael. However, the unscrupulous actions of a group of contractors doing the repair work have played a large part in the rising costs.

Homeowners trying to recover from natural disasters or weather damage are usually asked by their contractors to sign something called an Assignment of Benefits or AOB. Contractors have explained to homeowners that by signing an AOB they would be able to complete repairs faster – because it gave them permission to work directly with the homeowner’s insurance company.

“Homeowners may finally be seeing premiums start to drop since an AOB reform bill was passed in July of 2019.”

Ideally, an AOB would benefit homeowners who are already overwhelmed by the to-do list they’re managing as a result of home damage. However, there were quite a few contractors in Florida who took advantage of AOBs to inflate repair costs and overbill insurance companies — oftentimes, bringing insurers who refuted questionable charges to court. All of which, ultimately left homeowners with much higher insurance premiums.

Insurance Business Magazine spoke with James Lynch, Chief Actuary and Vice President of Research and Education at The Insurance Information Institute (III), about the issue. “Most typical homeowners’ insurance companies will cover water damage claims. If the piping in your home suddenly springs a leak, you, as an insured, have an obligation to get that leak fixed as quickly as possible. You call up a contractor who asks you to sign an AOB. Some contractors might then be abusing that AOB by doing a poor job or an overly expensive job and then billing the insurance company an excessive amount.”

Homeowners may finally be seeing those premiums start to drop since an AOB reform bill was passed in July of 2019. The bill was backed by many concerned parties, including Florida REALTORS®, who wanted to give relief to homeowners who were becoming overwhelmed by the constant premium increases.

The passing of this bill was necessary, as the abuse of AOB’s reached critical levels in Florida. The Insurance Information Institute shared that AOB misconduct in Florida has risen 70% in the past 15 years. The number of lawsuits involving AOBs went from 1,300 in 2000 to 79,000 in 2018. The cost of these lawsuits ultimately being passed on to homeowners in the form of inflated insurance premiums.

Tom Butler, Public Policy Communications Director for the state’s REALTORS® shared why Florida REALTORS® backed the bill in a Florida Record interview. “AOBs are an important policyholder resource that allows them to streamline the claims process and make needed repairs to their homes quickly,” he said. “Unfortunately, in the past 15 years or so, some contractors and attorneys have found a way to abuse the AOB process by overcharging for repairs and suing when insurance carriers refuse to pay. With the rise in AOB abuse comes higher premiums, as insurers seek to recoup their losses.”

The new reform bill gives homeowners greater flexibility when purchasing home insurance. They now have the option of selecting a less expensive policy that doesn’t allow AOBs. The bill also lessens the severity of the cost insurance companies take on when contractors sue them over disputed charges. All of which, will ultimately translate to lower premiums for overburdened Florida homeowners.


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