By Deborah Goonan, Independent American Communities
Two recent reports highlight insurance scams and fraud in Florida.
Condo owner waits more than eight months for repairs after bathroom flood
WFTS recently assisted Bill Honan, a frustrated condo owner in Tampa. A bathroom plumbing failure flooded his condo last fall. Restoration contractor, Synergy Contracting Group ripped out wet flooring and drywall, and began the process of drying out his home.
Synergy’s representative also insisted that Honan fill out an “Assignment of Benefits” (AOB) form. It’s a legal contract that gives Synergy the right to collect money directly from Honan’s insurance company, Citizens.
But Synergy and Citizens could not agree on the cost to repair Honan’s condo. Synergy billed $28,000. Citizens only paid about $10,000.
So, for eight long months, Honan has been living in half of his unit, with his belongings stacked up in boxes. No floor coverings. Holes in the drywall. His home is a complete mess.
When Take Action reporter Jackie Calloway stepped in to help Honan last month, a third party expert concluded that Citizens underpaid the insurance claim, but Synergy also overstated its invoice by $8,000!
After the WTFS report aired, Citizens reportedly wrote another check for $13,000.
If you’re doing the math, that still leaves Honan on the hook for about $5,000. Plus, the homeowner is trying to get out of his contract with Synergy, so he can hire someone else to fix his condo.
Tampa homeowner left with damaged condo 8 months after flooding
Insurance and contractor fought over repair cost (WFTS)
Posted: 6:35 PM, May 02, 2019
Updated: 6:53 PM, May 02, 2019
Insurance contractor holds condo owner hostage
At least 9 formal Better Business Bureau (BBB) complaints have been filed against Synergy Contracting Group, Inc. since 2016. So you may be as puzzled as I am to learn that the company is rated A+ by BBB.
If you read the details of the nine complaints, you’ll see a pattern of behavior. Synergy blames the insurance company for delaying payment, or blames the insured for not paying for the costs to repair their homes.
The AOB is standard business practice for Synergy. The problem with AOB is that the contractor can delay work until the insurance company pays.
But if the insurance company denies all or part of the claim, then Synergy chooses to stop work, leaving the homeowner in limbo.
Sometimes a homeowner doesn’t want to wait for months, and decides to pay the contractor after signing the AOB. But there’s a high risk that the contractor won’t reimburse the homeowner if or when the insurance company pays the claim.
The AOB is a one-sided insurance restoration contract that holds a property owner hostage. It practically invites corruption by way of inflated repair contracts. And it gives the insured no direct control over the claims appeal process.
But, if you think that’s bad, what if you found out you’ve been paying insurance premiums for months, but your agent didn’t purchase the policy?
Insurance agency owner allegedly sold $620K in insurance premiums
According to Florida Chief Financial Officer (CFO) Jimmy Patronis, Orestes Valentin Rodriguez, owner of Blue Guard Insurance Group Inc., used insurance premiums for personal expenses, leaving a homeowners associations uninsured.
A community association management company collected insurance premiums from homeowners, then paid insurance Rodriguez for an HOA policy.
But an investigation revealed that Rodriguez simply pocketed the money from the community association. Patronis alleges that the insurance agency owner financed the premiums, but never paid for the policies he claimed to issue to customers.
Following his arrest in March, Rodriguez was charged with 12 counts of second degree grand theft, seven counts of third degree grand theft and one count of first degree organized fraud. Under Florida law, Rodriguez faces up to 25 years in jail, if convicted.
Miami Insurance Agent Arrested for Stealing $620K in Premiums
Miami Insurance Journal | March 29, 2019
Maybe HOA consumers should rethink the management company-insurance alliance
For example, community association management company giants like Associa and First Service Residential benefit by selling insurance policies to the HOAs they manage.
HOA boards may find it convenient to allow the manager to obtain policies on the Association’s behalf. But how does the board know it’s getting the coverage it needs, and at a fair price?
It’s unlikely, when the management agent has an incentive to sell the board on its affiliated insurance company.
But even if an insurance company is not directly affiliated with the management company, can an HOA management agent guarantee that the insurance company is reputable?
The Miami insurance fraud arrest should remind owners of property in an association-governed community that funneling premium payments through a management company isn’t necessarily wise.
When HOA board members don’t establish a direct relationship with an insurance company or broker, they simply don’t know what kind of coverage they’re paying for — if any. ♦