This post discusses a provision in standard Florida homeowners’ insurance policies giving the insurance company a “right to repair” option. This option is included to give the insurance company a choice to either pay the insured or repair the damage when a covered loss occurs. At face value this may seem like a fine arrangement. After all, what’s better than sitting back and letting the insurance company take care of fixing your property? Here’s the reality: Insurance companies want to keep their money and pay as little as possible on claims, even if that means paying someone other than you to fix your property.
In the repair option setting, the insurance companies save money by using contractors who will do the job at reduced rates (usually in exchange for volume from the insurance company) and who have availability to hop on repairs quickly. Those factors alone are worrisome. The combination of someone working cheap, fast, and for the insurance company does not guarantee a desirable outcome. Add a threatening demand from the insurance company that you promptly authorize a complete stranger to enter your house to do said repairs and you’ve got real cause for concern. Needless to say, you’re usually better off hiring your own contractors, who have a good reputation, who work for you, and who will be around if issues come up after the repairs are done.
The question is what to do if you want a check instead of the insurance company’s crew. Answer: probably best to get a lawyer. Insurance companies aren’t afraid to try and intimidate policyholders, including the classic letter with big language in bold that you’re violating the policy and the insurance company will deny coverage altogether if you don’t comply. Some insurance companies (People’s Trust Insurance Company is a standout) have made it a practice to sue their policyholders to try and enforce their right to repair in lieu of payment. For example, in People’s Tr. Ins. Co. v. Acosta, 259 So. 3d 179, 181 (Fla. 3d DCA 2018), a homeowner made a claim for water damage. People’s Trust responded that the claim was covered but that it was exercising its contractual right to repair the damage. After the insured made requests for payment and refused to sign authorizations to allow repairs, People’s Trust filed a lawsuit against its insured to enforce, among other things, its right to repair the property in lieu of making payment for the damage. The trial court, generally speaking, denied People’s Trust’s request to force the insured to allow it to repair the property. The court ruled that People’s Trust had other remedies available to it in the event the insured breached the policy or otherwise caused repairs to be made in violation of the alleged right to repair. This left lots of loose ends, but People’s Trust couldn’t knock down the insured’s door to repair the damage. Regardless, the fact that insurance companies proactively sue their policyholders to try and enforce the repair option shows how seriously they take it and how economically important it is to their bottom line.
The takeaway from the Acosta case and others is that insurers arguably cannot force policyholders to authorize access their property for the performance repairs. However, the insurer will still be able to seek other forms of relief and potentially damages if it can show the insured breached the policy by preventing the insurer from exercising its option to repair. Other cases have addressed the issue when the insured sues the insurance company to avoid the repair option, and in those cases the court has found generally that the option may be enforceable. See, Hernandez v. Florida Peninsula Insurance Co., 211 So.3d 1126 (Fla. 3d DCA 2017), and Fernandez-Andrew v. Florida Peninsula Insurance Co., 208 So.3d 835 (Fla. 3d DCA 2017).
We’ve faced the right to repair option in a variety of cases. Each case turns on its own facts, but there are ways to work around the right to repair election. One thing that’s for sure is that the option is not absolute. The insurance company needs to follow specific requirements to properly invoke the option, and even if it does, there are still situations where repairs are not possible, practical, or in the best the interest of the insured. Contesting the right to repair may be like shaking the bees nest, but with the help of an experienced property insurance attorney, solutions are possible to receive payment or otherwise ensure appropriate repairs are performed in accordance with the policy.
This post is not legal advice and is for informational purposes only.