Citizens Property Insurance Corporation is taking steps to address claims “abuse” by limiting the amount it will pay policyholders who use outside contractors for non-weather related water damage.
According to a statement, the insurer’s Board of Governors unanimously approved the policy language changes on Wednesday, saying it addresses rising cost of non-weather water loss claims and related litigation that continue to drive premiums higher.
If approved by the Office of Insurance Regulation, policyholders who use an outside contractor and claim a non-weather related water loss – such as a broken pipe, a leaking water heater – would receive up to $10,000 in payment, including $3,000 for emergency water mitigation services.
However, those policyholders who use Citizens’ Managed Repair program, which is the insurer’s network of contractors, will not be subject to the policy sub-limits. The changes would take effect August 1, 2018, the statement says.
“We must address the abuse related to non-weather water claims while always ensuring every single Citizens policyholder has access to full coverage,” said Chris Gardner, chairman of Citizens’ Board of Governors. “Rather than simply restricting coverage, our proposed solution seeks to protect our customers and provide customer-friendly options.”
According to the statement, Citizens does not expect the limit to impact policyholders, as costs for emergency water removal and permanent repairs do not typically exceed $10,000.
Last year, Citizens launched its Managed Repair Program and established a $3,000 limit on water mitigation services that could be exceeded if approved by the insurer. However, this “flexible provision” has led to the increase the potential for lawsuits.
Under the new language, additional water mitigation services that exceed $3,000 would be completed by a Citizens contractor at no cost the policyholder, the statement says.
“We believe this is the most customer-centric approach to address the abuse and anticipated rate increases tied to non-weather water claim abuse,” said Steve Bitar, chief of consumer and agent services for Citizens. “Again, our overriding goal is to ensure that every Citizens customer has choices and access to full coverage.”