Perils Of Citizens’ Managed Repair Program, Option To Repair
Since 2017, Citizens Property Insurance Corporation – a not-for-profit, tax-exempt government entity created by Florida Legislature that provides insurance protection to Florida homeowners – has been increasingly steering policyholders towards its Managed Repair Program to resolve policyholders’ claims of non-weather related property damage caused by water. Here’s a quick rundown of Citizens’ Managed Repair Program and the problems it poses for homeowners.
Citizens Managed Repair Program Explained
Launched in 2017, Citizens’ Managed Repair Program provides services to policyholders whose homes have been damaged by water. Think accidental discharge or overflow of water or steam from plumbing, air conditioning, heating, household appliances and sprinkler systems. The Program, which is available for customers with new and renewal homeowner (HO-3) and dwelling property (DP-3) policies, consists of two services: Emergency Water Removal Services and a Managed Repair Contractor Network.
As the name suggests, Emergency Water Removal Services provides for expedient water removal and drying services. Once the policyholder reports their claim to Citizens, the insurance company sends someone out to remove the water and dry the area to protect the policyholder’s home from further damage. With Citizens’ Managed Repair Contractor Network, the insurance company selects a licensed contractor to repair the policyholder’s home for covered damages. Evidently, Citizens’ contractors back up their claim-related repairs with a five-year workmanship guarantee.
It is not mandatory for policyholders to participate in the Managed Repair Program; however, the consequences of not participating can be severe. Specifically, if the policyholder opts out of Emergency Water Removal Services and instead chooses their own contractor, their claim is subject to a lowly $3,000 limit. If the policyholder opts out of the Managed Repair Contractor Network, the policyholder’s claim is subject to just a $10,000 sublimit that is inclusive of both permanent repairs and the amount associated with Emergency Water Removal Services.
Conflicts Of Interest Inherent In Citizens’ Managed Repair Program
Similar to PPOs and HMOs, managed repair programs are created with the aim of controlling claims costs. In some cases, managed repair programs even allow insurance companies to drive in additional profits by virtue of the insurance companies owning the companies performing repairs or by the insurance companies entering into agreements with contractors to control or influence their decisions.
In the case of Citizens’ Managed Repair Program, its policyholders receive substantially increased coverage in return for letting the insurance company control the process of repairing their homes. When this happens, Citizens seemingly strips the policyholder and their advocates (e.g. public adjuster) of the ability to control how to best repair damage to the policyholder’s home.
Significantly, the contractors who Citizens hires are conflicted – they aim to do what is in the best interests of the insurance company. Unfortunately for the policyholder, this can result in those contractors performing shoddy work or underestimating the extent of property damage, or both.
Ultimately, Citizens’ policyholders are faced with a tough decision: either choose their own contractors but possibly not get paid for the total amount of the losses, or allow contractors who have the insurance company’s best interests in mind to make all of the decisions with respect to the repairs.
Citizens’ Option To Repair
Moreover, even if the policyholder opts out of the Managed Repair Program, Citizens could still elect to have its own contractors make repairs instead of making a payment to the policyholder. Citizens’ policies contain a “right to repair” or “option to repair” clause which reads something like this –
Our Option: If we give you written notice within 30 days after we receive your signed, sworn proof of loss, we may repair or replace any part of the damaged property with material or property of like kind and quality.
Florida Law On The Option To Repair
Option to repair or right to repair provisions are legal under Florida law. However, Florida law provides certain avenues for policyholders to protect them from an insurance company’s bad faith practices. First of all, if the insurer exercises its option to repair, it creates a new contract under which the insurer is bound to perform repairs within a reasonable time. In other words, if the insurance company takes charge on the repairs, the insurance company will be liable to the policyholder for bad repairs. This includes shoddy repairs, untimely repairs and even incomplete work. The insurance company can be sued for breach of contract and held liable for the cost of placing the policyholder’s property in its pre-damage condition.
Secondly, policyholders do not have to accept the insurance company’s scope of repairs. That is to say, an insurance company cannot simply deny the policyholder’s claim because the policyholder questions the scope and sufficiency of repairs that are proposed by the contractor who the insurance company hires. If that happens, the policyholder could sue for breach of contract and could seek a declaratory judgement as to the rights and obligations under the option to repair clause and whether the insurance company properly exercised a right to repair.
Florida Property Insurance Litigation Lawyers
If you face problems with a homeowners insurance company’s managed repair program or its “option to repair” or “right to repair” provisions, it is important to consult with an experienced insurance attorney who can provide you with assistance and help you achieve the best possible outcome on your claim. Contact The Louis Law Group at (954) 676-4179 for a free no-obligation consultation or case evaluation.