Legal loophole lets contractors take advantage of homeowners, watchdogs say

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Consumer watchdogs, state lawmakers, and the Florida Chamber of Commerce say a loophole in state law is driving up our insurance bills. It could also mean repair bills spinning out of control.

They say it starts when homeowners sign an assignment of benefits, or AOB form, without understanding its implications.

Charlie and Wendy Snellgrove hope other homeowners learn from their experience. Their problems started in their Clearwater home after they put in a new garbage disposal. They noticed a leak and called a plumber.

The plumber said he smelled a serious mold problem, though the Snellgroves could not smell it. He referred them to another contractor.  

Charlie was recovering from back surgery and foggy from pain pills at the time, so he signed an assignment of benefits, meaning the contractor could make decisions for him.  

"He told us, with our insurance, we could get a whole new kitchen… He said it’s going to be fabulous, your whole new kitchen and you’re going to have a vacation… because he said it was in the policy,” said Wendy. "He kept on and on and in the back of my mind, I thought, 'OK, Charlie will be better by tomorrow. We’re going to cancel the contract.' But guess what? You can’t cancel that contract.”

She said a crew showed up a few hours later and started tearing her kitchen apart. 

"I came back from my dog walk and most of the kitchen was gone,” she said. 

The insurance company challenged the claims, but eventually paid the company for its work in taking the kitchen apart. Then the Snellgroves found a new company to rebuild their kitchen, which they say cost more than $20,000.

State lawmakers and consumer watchdogs say they are getting flooded with similar stories involving many different contractors. It appears a lot of homeowners don't know what they're signing.

Officials say cases like these are driving up rates for home insurance. 

For example, Darleen Masturzo noticed a hot water leak in her Polk County mobile home. 

"They just told me not to worry. ‘We'll take care of everything. We work directly with the insurance company and you don’t have to worry about anything.' I was like, 'Oh that sounds easy,'” said Darleen. "That’s what started the whole thing."

She wound up working with two contractors and signed AOBs with both, allowing them to make decisions for her. Her heart sank when she called her insurance company. 

“She said to me, 'Do you realize what you signed?' and I said, 'No I don’t.' They told me I just basically signed my rights away,” Darleen recalled.

The contractor dismantled much of her kitchen and bathroom. She said she could not live in her home for about six months. Darleen said the project cost her insurance company around $42,000 and she paid $5,000 out of pocket.

State lawmakers have tried to tighten the law on AOBs for years, but reform bills have failed. 

Tampa representative James Grant has led the push for AOB reform. He said his prior efforts have stalled in the Senate. He will try again in the 2019 session. 

"I think it is fair to say they have been able to stop progress in the Florida Senate only because the Florida Senate is letting them,” said Rep. Grant.