Citizens Property tweaks policy to stem water claims crisis

Citizens Property Insurance Corp. is taking more steps to rein in a wave of nonweather-related water claims that have driven up its legal costs and triggered higher rates.

The board of the state-run property insurance company approved policy changes that would cap payouts for water losses not related to weather at $10,000 -- except for policyholders who choose a Citizens-vetted contractor.

"We must address the abuse related to nonweather water claims while always ensuring every single Citizens policyholder has access to full coverage," Chris Gardner, chairman of Citizens' board, said in a release. "Rather than simply restricting coverage, our proposed solution seeks to protect our customers and provide customer-friendly options."

The move is an attempt to clamp down on the abuse of what's known as "assignment of benefits." That's when a customer signs over their legal right to deal with their insurance company to a third party, such as a contractor. The contractor can then directly take the insurance company to court -- in the customer's name -- if the insurance company refuses to pay what the contractor is asking for the repair.

In recent years, especially in South Florida, widespread lawsuits against insurance companies for such repairs have driven up the cost of insurance.

If approved by the state Office of Insurance Regulation, the limits would go into effect Aug. 1. For policyholders who choose not to participate in the Citizens' Managed Repair Program, which vets the contractors, $7,000 of the $10,000 that would be paid out for water damage not related to storms would be designated for permanent repairs on a home.

Previously, the program -- launched in 2017 -- had a $3,000 cap that could be increased if Citizens approved.

"The flexible provision has had the unintended consequence of increasing the potential for litigation," Citizens said in a release.

Contact Malena Carollo at mcarollo@tampabay.com or (727) 892-2249. Follow @malenacarollo.