During the last two years, Citizens staff has presented multiple changes to Actuarial and Underwriting Committee and the Board of Governors to address the rapidly rising claims costs due to water losses and associated litigation.
At its December 2015 meeting, Citizens Board of Governors approved a recommendation from staff to modify policy language. Changes included:
• Limit coverage for cost of Reasonable Emergency Measures that are required by contract to the greater of $3,000 or 1 percent of the Coverage A limit, unless the policyholder first receives approval from Citizens.
• Require prompt Loss Reporting by excluding coverage for permanent repairs that begin before the earlier of:
-72 hours after Citizens is notified of the loss
-The time of loss inspection by Citizens
-The time of other approval by Citizens
• Clarify that coverage does not apply for:
-collapse of plumbing caused by deterioration or age,
-access is provided only for the part or portion of the plumbing system that caused the covered loss
-insured must comply with duties after loss, there is no coverage if failure to comply prejudices Citizens.
Following those changes, at its September 2016 meeting, the Board also approved policy changes to support two new programs offered by Citizens. These programs provide
Emergency Water Removal Services and Managed Repair Contractor Network Program and are completely optional for the policyholder.
During 2017 Legislative Session, Citizens and the private insurers worked closely with The Office of Insurance Regulation to propose significant legislative changes to address the continuing problems specifically associated with assignment of benefits (AOB) abuse. Unfortunately, no legislative changes were made and the policy language changes made in 2016 have not addressed the claim costs associated with AOB and water losses. Citizens has experienced a significant underwriting loss for 2016 and it appears that the abuse and litigation in water and AOB will continue. While legislative action is ultimately necessary to curb AOB abuse, it is clear that further policy changes are also needed.
Contact John McMenamin for a free policy review and to discuss how these changes affect you.
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Citizens Product Changes – Address Water Losses
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