Property insurance reserves vs. Chris Sprowl’s patience: which will run out first?
Any residual resistance from Sprowls toward more drastic action right now can be directly laid at the feet of insurance company advocates who promised that last year’s reforms would make a positive impact on the number of lawsuits within about 18 months, but that deadline hasn’t passed yet. Sprowls, insiders say, is carefully weighing the speed of the collapse of Florida’s insurance market with the reductions in litigation that are slowly, but surely starting to manifest themselves thanks to those already passed reforms.
And besides, others say, trial lawyers aren’t the problem anyway. They’re just a symptom.
That’s the argument of Jerry Theodorou, Director of the Finance, Insurance and Trade Policy Program at R Street Institute, a Washington D.C. public policy research organization.
“Although excessive litigation is the proximate cause of Florida’s property insurance issues, it’s not appropriate to blame the lawyers,” Theodorou wrote. “Lawyers litigate—that’s their job.”
Roof repairs in the spotlight
Theodorou points to other structural problems within Florida’s insurance market, including loopholes that allow contractors, lawyers and homeowners to inflate the number and the value of claims payments. And one of the largest areas of abuse are roofing claims.
While homeowners insurance was never intended to be a way to replace an aging roof with a brand new one for free, many homeowners are easily lured into bad faith litigation by the promise of having an insurance company foot the bill even when the problem is mostly routine wear-and-tear. The national average for replacing a worn roof is over $7,000, a sum of cash anyone would be happy to pocket if their insurance company is footing the entire bill. Barring a storm that causes actual damage to the roof that is covered under the homeowner’s policy, replacing a roof is part of the cost of homeownership.
One of the major fault lines emerging ahead of May’s special session will be roof repair policies and costs. Insurers argue that roof damage claims should be valued on the age of the roof, rather than the total replacement cost. It’s unfair to insurers if a homeowner has gotten 15 years of use out of an aging roof and then files a claim for the full cost of a total roof replacement because of some evidence of storm damage.
As Theodorou points out, “A homeowners’ insurance policy is not a maintenance agreement. The natural wearing out of a roof is not a covered cause of loss.”