John, a lifelong resident of Venice, Florida, currently resides in the family home where he and his wife raised their children. After Hurricane Ian struck, he promptly filed an insurance claim the very next day. However, the insurance company’s adjuster assessed the damage and offered a settlement amount that fell short of John’s $9,000 hurricane deductible, leaving him without any financial relief for his losses.

John repeatedly voiced his concerns to his Florida insurance company, disputing their inadequate settlement offer and pointing out several overlooked damaged items. Despite his efforts, it appeared as though his complaints were largely ignored.

John’s insurance company opted to exercise its right to use appraisal to resolve the ongoing insurance claim dispute. John was aware that even after the appraisal, his insurance company retained the right to carry out repairs using their own contractors. This meant that John would be responsible for covering the expenses associated with the appraisal process.

John’s insurance company provides a modest discount ranging from $100 to $500 for customers who purchase their insurance plans. This minor discount grants the company the authority to manage repairs on your property, effectively giving them control over thousands of dollars in insurance claim payouts for damages. It’s worth noting that this company has a history of taking legal action against policyholders who don’t comply with their right-to-repair program.

About the Insurance Company’s “Right to Repair”

Some argue that it’s more convenient to let the insurance company dispatch their own vendors to handle home repairs. I beg to differ. These vendors are not truly serving the policyholder; their primary allegiance is to the insurance company, which provides them with a steady stream of work. To maintain this business relationship, vendors are often obligated to follow the insurance company’s directives. What consumers may not realize is that there are behind-the-scenes agreements taking place, often without their knowledge or approval.

The fundamental purpose of an insurance policy is to provide financial compensation or indemnification for your damages in return for your monthly premiums. It’s not designed to send contractors to your home for repairs.

I believe it’s risky to prepay contractors for repair work. If the work is subpar, delayed, or not up to your standards, you’re left with little recourse since the funds have already been released to the contractor. This is especially concerning when the insurance company owns the contracting service, as it further diminishes your control over the quality and timeliness of the repairs.

One final point on the “right to repair” issue: when hiring a contractor for significant projects like a new roof or kitchen renovation, it’s common practice to pay an initial deposit of 25% to 30%. Subsequent payments are then made based on the progress of the work. Only after the job is fully completed, proper permits are obtained, and no liens exist from either the general contractor or subcontractors is the final payment released.

For homeowners with a mortgage, the insurance claim process involves an additional layer of complexity. Insurance settlement checks often include the mortgage company’s name, requiring the check to be sent to the mortgage company for processing. This step allows the mortgage company to ensure that the repair work is completed, thereby safeguarding their equity in the property.

The mortgage company typically holds the funds in an escrow account and releases payments to you and your contractor in installments—often 25%, 50%, and a final payment upon 95% completion of the work, as per your insurance settlement estimate.

Interestingly, mortgage companies seem to understand the importance of not disbursing funds before work is satisfactorily completed, giving you control over your money. However, some insurance companies have found a loophole that allows them to prepay their in-house contractors for work that hasn’t even begun, effectively seizing control of your funds.

Settling the Insurance Claim by Appraisal

The insurance company appointed its own appraiser, while John chose Florida Insurance Claim Appraisal to represent him. Both appraisers agreed upon a neutral third-party umpire in case they couldn’t reach an agreement on the extent of the damage caused by Hurricane Ian to John’s home.

After jointly inspecting the property, the appraisers spent about a month negotiating over discrepancies in their damage valuations. Fortunately, they were able to amicably resolve their differences without requiring the intervention of the umpire. The negotiation was conducted professionally and fairly, resulting in a final settlement figure for John’s Hurricane Ian damages. John was extremely pleased with the new appraisal award, which amounted to $123,250 for replacement costs and $115,675 for actual cash value after recoverable depreciation.

In a typical scenario without a “right to repair” clause, most Florida insurance companies would simply pay the new appraisal award amount minus any prior payments and the deductible. However, John’s insurance company had other plans. After receiving the appraisal award, they offered John a substantial discount of $33,000 off the settlement amount in exchange for a written release, allowing him to manage his own repairs.

This sleazy, underhanded business practice that Florida insurance regulators seem to be overlooking raises ethical concerns. It’s hard to believe that the Florida Department of Insurance is unaware of such anti-policyholder practices. Fortunately, John was able to negotiate a more favorable final settlement, providing him with sufficient funds to repair his home adequately.

Please feel free to reach out to us at 954-978-0886 if you have a property damage claim and are disputing the settlement made by your insurance company or get a second opinion at no cost.