Citizens Property Insurance Corporation was created in 2002 by the Florida state government to provide property insurance for homeowners who could not obtain insurance elsewhere. It is a government-owned insurer of last resort that has become the largest homeowner insurer in the state with over 1.4 million policies in force as of August 31, 2011. If a large storm endangers the financial viability of Citizens, they have the power to raise rates for policyholders by more than 40 percent and assess residents covered by other insurance companies up to 16 percent greater than their current premium in order to recoup their losses. These financial issues have caused Citizens and the legislature to make ongoing changes to homeowners’ policies, certain coverage’s and how policyholders are reimbursed.
In 2012, a new law was passed that limits the ability of a public adjuster to represent a Citizens policyholder for a fee. The law limits the public adjuster to charging 10% of the difference between Citizens initial offer and what additional settlement dollars are recovered for the policyholder.
Specifically the law states:
FS 627.351(6)(a)6–For any claim filed under any policy of the corporation, a public adjuster may not charge, agree to, or accept any compensation, payment, commission, fee, or other thing of value greater than 10 percent of the additional amount actually paid over the amount that was originally offered by the corporation for any one claim.
From our perspective and conversations with Citizens policyholders, this puts those who wish to engage a public adjuster at an unfair disadvantage in settling their claim, leaving them without a knowledgeable advocate to represent their best interests. It also puts the public adjuster in a predicament of potentially losing money by simply not being able to cover their time to help a policyholder in the initial states of the claims process when much of the best assistance and advice can be given.
We can only guess at what motivated such a draconian rule. Perhaps this is an admission that the difference in what Citizens offers and what the lawmakers think a public adjuster can obtain for the policyholder will more than pay for the public adjusters time and expenses in properly estimating, filing and managing a claim. A 2010 study conducted by OPPAGA, a Florida state agency found that Citizens policyholders received appreciably higher compensation on average ($9,379 per claim when represented by a public adjuster vs. $1,391 when not). The study reviewed 61,324 non-catastrophe claims and spanned the period of March 2008 to June 2009. To be “fair and balanced,” we should also point out that the public adjuster represented claims also took longer to reach final settlement (132 to 296 days longer than claims without public adjuster representation depending if they were new or reopened claims). This statistic does not surprise us given the need to “negotiate” with Citizens for more money on behalf of the policyholder but does give a good idea of how much money policyholders may be leaving on the table. The study also does not show how much more money the public adjuster got for the policyholder in the initial payment, a critical factor in this situation.
Remember it’s not just about how much more money a trained, and experienced public adjuster can get you, it’s also about the service they will provide you. When you have an insurance loss it can become another burden in your busy life and imposes contractual duties that you must perform. Read the duties sections after a loss that is outlined in your property insurance policy. A public adjuster knows that being with you early in the claim loss process, allows him to manage the loss to your benefit. Our experience has shown that this will result in more money and less stress on you the policyholder.
Sadly, the powers to be that have influenced policymakers for the Citizens Insurance Corporation want you the policyholder to go it alone leaving you to trust that a fair offer will be forthcoming. They also expect that you, “the insured” will understand all the issues surrounding your loss and comply with your insurance policy terms and conditions to avoid prejudicing your insurance claim. You can bet if you don’t they will call you on it.
Will you receive a fair offer?
It’s hard to say. Every claim is different and has its own set of circumstances. What we do know is that insurance policies contain many grey areas open to interpretation that can impact the value of your settlement. The most important thing is to understand what your claim is really worth before you receive an offer from the insurance company. Changes in the way Citizens estimates and reimburses policyholders can greatly impact your initial and final settlement. You can learn more about this by reading our Citizens Claim FAQ and a recent article we wrote on Depreciation / Holdback RCV vs. ACV.
Tutwiler & Associates continues its dedication to helping policyholders, regardless of who covers their property. For Citizens policyholders, we encourage you to contact us when you experience a property loss and have a claim. Our adjusters will provide you with free advice on how to properly handle your particular claim in its early stages which can significantly impact your overall settlement. Based on the type of claim you have, we may also provide you with a preliminary estimate of what we think your claim is worth if you allow us to represent you once you receive your first offer. If the initial settlement offer and our estimate is close in value, then you will have the peace of mind knowing you received a fair settlement offer. If it is not, we can pursue the additional claim dollars that you deserve.
We encourage you to read the Citizens Claim FAQ linked to this page to learn more details of why it makes sense to engage professional claim representation by a public insurance adjuster.