equitable assignment of benefits florida

You are using an outdated browser. Please upgrade your browser to improve your experience.

Client Alerts, News Articles, Blog Posts, & Multimedia

Everything you need to know about BMD and the industry.

The Current State of Assignment of Benefits Litigation in Florida

equitable assignment of benefits florida

By: Senior Counsel Nhan T. Lee with Associate Wayne A. Comstock

Homeowners typically experience property damage and use contractors to repair the damage as quickly as possible. [4] An assignment of benefits, or AOB, is an agreement “in which a contractor begins the work [on the property owner’s home] without charging the property owner and agrees to seek compensation from the insurer.” [5] An AOB can be beneficial to a homeowner because an AOB eliminates the processing of a claim through the insurance company. [6] Without contacting the insurance company, “the insured can hire a contractor, wait for the contractor to finish the work, then pay the deductible.” [7] Despite the time saving benefit to a homeowner, AOBs can lead to costly litigation and higher premiums. [8]

In Florida, AOB abuse first started with Personal Injury Protection (“PIP”) claims. [9] A PIP claim works similar to an AOB property damage claim. [10] In a PIP claim, “[t]he assignment lets a medical provider seek reimbursement for their services directly from an insurer. The injured person receives medical care and does not have to deal directly with their insurance company.” [11] PIP claims led to abuse because plaintiff’s attorneys filed many lawsuits on behalf of the assignee “for inflated claims or potentially unnecessary medical treatment.” [12]

Prior to 2019, AOBs frequently resulted in costly litigation primarily because Florida law provided for one-way attorney’s fee provisions. [13] In a first-party lawsuit, Florida law required insurers to pay plaintiff’s attorneys a court determined “reasonable sum.” [14] However, Florida law did not require plaintiffs to compensate the insurer’s attorneys. [15] This imbalance pressured insurers to settle claims “rather than face expensive litigation, which, if they lose, means they must pay the other side’s lawyers.” [16]

The public policy rationale supporting one-way attorney’s fee provisions in Florida stems from Feller v. Equitable Life Assurance Soc. [17] In Feller , the Supreme Court of Florida described the purpose of one-way attorney’s fee provisions as “to discourage the contesting of policies in Florida courts, and to reimburse plaintiffs reasonably their outlay for attorney’s fees when suing in Florida courts.” [18] In Ivey v. Allstate Ins. Co. , the Supreme Court of Florida further described the rationale behind one-way attorney’s fee provisions as “to level the playing field so that the economic power of insurance companies is not so overwhelming that injustice may be encouraged because people will not have the necessary means to seek redress in the courts.” [19] AOBs defeat the purpose of one-way attorney’s fee provisions because AOBs do not serve those individuals one-way attorney’s fee provisions are meant to protect: the policyholder and any beneficiaries the policyholder designates. [20]

The Florida legislature enacted PIP reforms in 2012 that curbed “AOB abuse in auto insurance.” [21] However, around the same time, AOB abuse began spreading to property damage claims. [22] Vendors targeted homeowners insurers because Florida is home to a large number of insured homes, “which ensures large claimant and plaintiff pools.” [23] In addition, hurricanes and tropical storms in Florida carry the risk of water damage. [24] In Florida, “[w]ater damage repairs often need to be undertaken immediately to prevent further damage.” [25] To complicate matters further, “the standard homeowners policy requires that policyholders protect their property from further damage by making reasonable and necessary repairs.” [26] A homeowners policy is more attractive than an auto insurance policy because the average loss is higher: $11,000 compared with $1,300. [27] The higher threshold means that a homeowner assignee in a property claim can potentially “inflate repair bills to a greater degree.” [28] As a result of increasing AOB litigation, insurers raised premiums. [29] For example, “the average premium [in Florida] rose 30 percent between 2007 and 2015.” [30] AOB abuse is most pronounced in Florida because “insurers’ legal costs are rising much faster than losses from homeowners claims” compared with other states. [31]

In an effort to curtail AOB abuse, the Florida legislature enacted significant reforms to AOBs and the one-way attorney’s fee provision. [32] The legislation, enacted on July 1, 2019, “require[d] assignment agreements to be in writing and signed by both the assignee and assignor.” [33] Other changes to AOB agreements included allowing “assignors to rescind without penalty within seven days of the execution of the agreement” and obligating “[a]ssignees . . . [to] provide a copy of an assignment agreement to an insurer within three business days of the execution of the agreement.” [34] The most notable difference, however, involved the one-way attorney’s fee provision where the provision “no longer applies to an assignee.” [35] Instead, the 2019 reforms encouraged insurers to avoid litigation through negotiation or appraisal. [36] In a lawsuit involving an AOB agreement, attorney’s fees may only be recovered as follows:

Less than 25 percent of the disputed amount, the insurer is entitled to an award of reasonable attorney fees.
At least 25 percent but less than 50 percent of the disputed amount, no party is entitled to an award of attorney fees.
At least 50 percent of the disputed amount, the assignee is entitled to an award of reasonable attorney fees. [37]

As companion legislation, the Florida legislature also passed Fla. Stat. 627.7153. [38] Under Fla. Stat. 627.1753, an insurer may restrict an insured’s “right to execute an assignment agreement” if the insurer provides (1) an insurance policy that does not restrict the insured’s “right to an execute an assignment agreement[,]” (2) the restricted policy at a lower cost compared with the unrestricted policy, (3) the policy restricting or prohibiting assignment in whole at a “lower cost than any policy [restricting or] prohibiting assignment in part[,]” and (4) specific language in any restricted policy as described in the statute. [39]

The Florida legislature enacted the 2019 reforms, in part, to reduce insurance premiums for Florida homeowners. [40] In the year following the reform, Citizens Property Insurance Corporation (“CPIC”), reported that insurance premiums dropped for almost 44,000 policyholders. [41] In addition, the reform helped reduce AOB litigation. [42] In 2020, “Florida [saw] less first party cases being filed . . . . CPIC alone [saw] their caseload drop from 2,000 to 1,750 suit per month.” [43] Despite the reduction, Florida lawmakers remained concerned about AOB abuse. [44]

In May 2022, the Florida Legislature approved additional property insurance reforms. [45] The reforms further limit the awarding of attorney’s fees in AOB cases. [46] The reform, titled SB 2D, prohibits a court from awarding attorney’s fees to an assignee in AOB litigation. [47] The reforms also severely “restrict the awarding of fee multipliers in property insurance disputes to ‘rare and exceptional circumstances.’” [48] Florida lawmakers believed such reforms necessary given Florida’s excessive contribution to homeowner insurance lawsuits across the United States. [49] Florida, responsible for “just 9% of property insurance claims, generates 79% of the nation’s homeowner insurance lawsuits.” [50] Florida lawmakers approved the reforms under the belief that “lawsuits . . . exploded in the past several years” despite the 2019 reforms. [51]

While Florida lawmakers acted to protect homeowners, [52] contractors rallied against the reform. [53] In June 2022, the Restoration Association of Florida and Air Quality Assessors, LLC, “filed [a] lawsuit in Leon County circuit court” testing the constitutional validity of the legislation. [54] In filing the lawsuit, “contractors contend that assignment of benefits helps homeowners who are unfamiliar with making sure insurance claims are handled properly.” [55] Contractors believe that AOBs help homeowners quickly address home damage due to inclement weather and other unforeseen circumstances. [56]

In Florida, contractors and Florida lawmakers are seemingly at odds with respect to AOBs. [57] The 2022 reforms remove the awarding of attorney’s fees altogether from AOB litigation, [58] which may both help and hurt homeowners in Florida by lowering property insurance premiums but making immediate home repair less accessible. AOBs will remain a contentious issue moving forward, and the reforms may lead to additional challenges.

[1] Jim Ash, Governor Signs Property Insurance Reforms and Condo Safety Measures , Florida Bar (May 27, 2022), https://www.floridabar.org/the-florida-bar-news/governor-signs-property-insurance-reforms-and-condo-safety-measures/.

[2] Mark Delegal & Ashley Kalifeh, Restoring Balance in Insurance Litigation: Curbing Abuses of Assignments of Benefits and Reaffirming Insureds’ Unique Right to Unilateral Attorney’s Fees 9 (2015), https://www.fljustice.org/files/123004680.pdf.

[3] Douglas Scott MacGregor, Florida Takes Aim at Assignment of Benefits Abuse: A Home Run or a Swing and a Miss? , in New Appleman on Insurance: Current Critical Issues in Insurance Law (2021).

[9] Ins. Info. Inst., Florida’s Assignment of Benefits Crisis: Runaway Litigation Is Spreading, and Consumers Are Paying the Price 7 (2018).

[12] Id. at 8.

[13] Id. at 4.

[17] Feller v. Equitable Life Assurance Soc. , 57 So. 2d 581, 583 (Fla. 1952).

[19] Ivey v. Allstate Ins. Co. , 774 So. 2d 679, 684 (Fla. 2000).

[20] Delegal & Kalifeh, supra note 2, at 3.

[21] Ins. Info. Inst., supra note 9, at 12.

[23] Id. at 13.

[24] What You Should Know About Water Damage in Your Home or Business , Kanner & Pintaluga, https://hurricanedamage.com/blog/what-to-know-about-water-damage/.

[25] Ins. Info. Inst., supra note 9, at 13.

[29] Id. at 14.

[32] Fred E. Karlinsky, Esq., Florida Assignment of Benefit Abuse: Recent Developments, Fed’n of Regul. Couns., https://www.forc.org/Public/Journals/2019/Articles/Summer/Vol30Ed2Article1.aspx.

[36] Cozen O’Connor, Florida’s “Assignment of Benefits” Bill: A Guide Through the New Statutory Framework , JDSupra (Apr. 26, 2019), https://www.jdsupra.com/legalnews/florida-s-assignment-of-benefits-bill-a-29861/.

[37] Fla. Stat. § 627.7152(10)(a) (2019).

[38] Fla. Stat. § 627.7153 (2019).

[39] Id. § 627.7153(2)(a)-(d).

[40] O’Connor, supra note 36.

[41] Rumberger Kirk, Impact of Florida’s New Assignment of Benefits Law: HB 7065 , JDSupra (May 26, 2020), https://www.jdsupra.com/legalnews/impact-of-florida-s-new-assignment-of-80753/.

[44] Ash, supra note 1.

[53] Jim Saunders, Contractors Challenge New Florida Insurance Law , Law (June 1, 2022), https://www.law.com/dailybusinessreview/2022/06/01/contractors-challenge-new-florida-insurance-law/.

[57] Ash, supra note 1; Saunders, supra note 53.

[58] Ash, supra note 1.

Starting an Advanced Practice Provider Practice

Ftc increases targeting of companies lacking cyber protection, new federal medical conscience rule and its implications, marijuana reclassification and aprn/pa prescribing, federal trade commission voids non-compete agreements nationwide.

Client Update – Assignments of Insurance Benefits and “AOB” Vendors

Wednesday, October 6th, 2021 •

By Tiffany A. Bustamante and John P. Robins

We hope this Client Update finds you in good health and positive spirits. Below are a few recent decisions regarding assignment of benefits, or “AOB” vendors, we felt may be of interest. As always, we will continue to keep you appraised of any new issues emerging in the insurance industry.

EXECUTIVE SUMMARY

QBE Specialty Insurance Company v. United Reconstruction Group, Inc. , Case No. COCE16-015010 (Fla. 4TH DCA July 21, 2021).

Florida Appellate Court Issues Opinion on Validity of Assignment of Benefits in Property Insurance Claim . The 4 th DCA held that the mere fact a vendor performed the work on the home did not give rise to an equitable assignment, absent any evidence that the insured intended to assign his rights under the policy to the vendor.

Brown v. Omega Insurance Company, 2021 Fla. App. LEXIS 7550 (Fla. 4 th DCA, May 26, 2021)

Florida Appellate Court finds that an assignment of benefits to a vendor does not automatically preclude the insureds from filing suit in their own name for the claim.

Webb Roofing v. FedNat Insurance Company, 320 So. 3d 803 (Fla. 2 nd DCA 2021)

Florida Appellate Court addressed whether a third party vendor, as assignee, could avoid the contractual appraisal provision in the policy. The 2 nd DCA held since appraisal is not a required duty of the insureds under the policy’s “Duties After Loss” provision, it is able to be assigned to a vendor and is “a contract condition that is not eliminated by post-loss assignment of the contract.”

RECENT APPELLATE COURT OPINIONS

In QBE , the Appellant water mitigation company had a contract with the named insured who had a policy of insurance with QBE. The named insured, Fallon Jallali, allegedly sustained a water loss to the home insured by QBE. Jallali hired a water mitigation company, United Reconstruction Group, Inc. (“United”), to perform water mitigation and minor repairs.

United claimed that the insured signed an assignment of benefits/direct payment authorization contract and, therefore, was the sole legal payee for the water mitigation invoice under QBE’s loss payment provision in the contract, which requires that QBE pays the insured “unless some other person is named in the policy or is legally entitled to receive payment.” Specifically, United’s contract held the following assignment:

I hereby assign all rights and benefits in relation to such Services to [United] completely and without reservation. I authorize and instruct all insurance company(ies) that may be contractually obligated to provide benefits and/or payments to me for such Services to pay [United] directly as sole payee. I authorize and instruct any payments issued by the insurance company for the Services to be sent to [United] directly. In the event [United] does not receive payment in full for its Services, I hereby assign any and all causes of action, including compromising, litigating, settling or otherwise resolve said claim exclusively as [United] sees fit in its sole discretion. I understand, agree, and waive any right or claim of interest that I may possess to interfere with [United’s] exclusive discretion in this regard. I understand that whatever amount [United] is unable to collect from the insurance is ultimately my responsibility.

QBE eventually negotiated United’s bill, lowering the mitigation invoice from over $10,000.00 to around $8,000.00. However, despite being provided with the direct pay authorization/assignment of benefits, QBE issued the check to the insured, Fallon Jallali, in his name. United followed up by filing suit, claiming a breach of the loss payment provision.

In support of a summary judgment motion in the trial court, United presented the contract, which was signed, but not completely filled out. The contract itself was signed, but the “printed name” line was not filled out. Additionally, United filed an affidavit of one of its owners, which indicated that the insured executed, “or caused to be executed” the assignment, making United the legal payee for any checks for water mitigation coverage. United’s argument aimed to create an equitable assignment between the insured and United, despite the missing signature of the insured.

QBE mirrored its affirmative defenses by arguing that the contract was not signed by the insured, but instead was signed by the named insured’s father. In response to the motion for summary judgment, QBE hired a handwriting expert to prove their contention that the insured did not in fact sign the document. While the trial court determined there was an issue of fact regarding the signature, the trial court still granted summary judgment, concluding that a valid assignment between the insured and United existed.

The Fourth DCA reversed the summary judgment order and solidified the Florida Court’s rule regarding equitable assignments from AOB vendors:

Without resolving the underlying factual issue of who executed, or caused to be executed, the written AOB agreement, it cannot conclusively be said that the insured intended to assign her right to payment under the policy to United. The mere fact that United performed work on the home does not give rise to an equitable assignment absent evidence the insured intended to assign her rights.

Importantly, this decision appears aimed to protect insurers from AOB vendors that attempt to shirk the responsibilities placed on them by the new AOB statute, requiring signatures of all insureds in order to be valid. By closing a potential back door in the form of “equitable” assignments of benefits, the Fourth DCA effectively maintains an insurer’s ability to challenge deficient assignments, in turn dealing directly with insureds over vendors that have driven the cost of mitigation up drastically over the past decade.

In Brown, Omega Insurance Company sought to prevent an insured from filing suit in a case where benefits have been assigned. The insureds, John and Georgene Brown, assigned their insurance benefits to ERG Contracting, under a standard direct pay/assignment contract. However, prior to completing any work, the Browns filed suit against Omega for breach of contract.

At the trial court level, Omega succeeded in convincing the court that through the assignment of benefits, the insureds had divested all of their legal standing for the claim to ERG, and therefore could not bring a lawsuit. However, the Fourth reversed the decision.

Judge Warner turned to the contract itself in opining on the issue, which specifically granted ERG the rights and interests of the policy “for the work performed or to be performed by Contractor.” However, the contract also only obligated ERG to perform the work that was approved by the insurance carrier. Omega had already denied any approval for work to be performed. Hence, ERG was no longer obligated to perform any work under the policy. Since no work was performed by ERG, it follows that their exclusive right to the benefits of the policy was extinguished, allowing the insureds to pursue their lawsuit unhindered.

In short, assignment of benefits to a third party does not automatically preclude the insureds from filing suit in their own name for the claim. In cases where no work was performed, or cases where the AOB vendor has relinquished their assignment, the insureds can continue to pursue breach of contract lawsuits against insurers.

As a final, brief note, several recent cases, like Webb Roofing, have bolstered case law regarding the AOB vendors’ duty to comply with the policy once an insured’s benefits have been assigned.

Webb Roofing received an assignment that entitled it to receipt of payment from the insurance carrier, and concomitant with that right was its duty to comply with the conditions of the contract that afforded it payment. Therefore, we conclude that the assignment in this case did not eliminate the duty of compliance with the conditions imposed by the insurance contract…

Webb protects insurers against Public Adjusters who refuse to participate in the claims process, including appearing for examinations, pre-suit discovery, and appraisal. As you know from our previous update, the new AOB statute, Fla. Stat. §627.7152 requires assignees of insurance benefits require participation in alternative dispute resolution if required by the policy on all agreements executed after July 1, 2019. However, cases like Webb prevents disputes over post-loss obligation compliance in claims with older assignment agreements, or any assignments that fall outside of the statute.

Atkinson, P.A. remains committed to providing you with sound guidance, representation, and defense in response to these complex legal issues and we will continue to monitor noteworthy cases. Should you have an questions with respect to this update, please feel free to contact our partners directly.

Very truly yours,

TIFFANY A. BUSTAMANTE

John P. Robins

--> phone -->

Learning Center

Opportunities

From Chaos to Clarity: Assignment of Benefits Reforms and Their Effects on Insurance Claims in Florida

Oct 10, 2023

Navigating the complexities of insurance claims can be daunting, especially when dealing with property damages that require immediate attention. The Assignment of Benefits (AOB) process has been both a solution and a source of problems for homeowners and insurers alike. This article delves into the recent reforms in Florida’s AOB landscape, aiming to clarify its impact on policyholders, insurers, and contractors.

Definition of Assignment of Benefits and How it Functions in Insurance Claims

Assignment of Benefits, often abbreviated as AOB, is a legal agreement that transfers the rights or benefits of an insurance claim from the policyholder to a third party. In a standard AOB scenario, a homeowner dealing with property damage will sign over their insurance benefits to a contractor. Once this transfer occurs, the contractor assumes the responsibility for carrying out repairs and directly negotiates with the insurance company for reimbursement. This arrangement, designed to expedite the repair process, also comes with its own set of complexities and potential pitfalls.

Discussion of the Challenges and Issues that Prompted AOB Reforms in Florida

Florida’s insurance landscape has been riddled with complexities and challenges, with AOB standing out as one of the most pressing issues. Unethical contractors and legal advisors found ways to exploit existing loopholes in the system. This exploitation led to a surge in inflated claims, which in turn caused insurance premiums to skyrocket. Such a precarious situation created an unsustainable environment, making urgent reforms not just desirable but absolutely essential to restore balance and fairness in the insurance market.

Florida’s Insurance Market and the Factors that Influenced AOB-Related Challenges

The insurance market in Florida faces a unique set of challenges, notably the frequent occurrence of natural disasters such as hurricanes and floods. These environmental factors have intensified the issues surrounding AOB. In the wake of such calamities, homeowners often seek quick repairs to mitigate damage. Unfortunately, many proceed without fully grasping the implications of signing over their insurance benefits to contractors. This lack of understanding has contributed to the exploitation and abuse of the AOB system, making reforms all the more critical for the state.

Reforms Introduced and Their Effects on Insurance Claims

Recent reforms have aimed to infuse the AOB process with greater transparency and fairness. These pivotal changes encompass new mandates for written estimates and caps on attorney fees. Such modifications have effectively curtailed frivolous lawsuits and mitigated inflated claims, thereby fostering a more equitable environment for both insurers and policyholders. This recalibration of the system serves to restore trust and balance, making the insurance claims process more straightforward and less susceptible to abuse.

Potential Challenges and Adjustments Faced by Insurers and Contractors in Florida Due to the Reforms

While the reforms have been largely positive, they also present new challenges. Insurers must adapt their policies to comply with the new laws, and contractors may find it more challenging to get paid promptly. However, these are necessary growing pains for a more transparent system. These adjustments are part of a broader effort to create a more equitable and efficient insurance landscape, benefiting the industry and consumers in the long run.

How AOB Reforms Contribute to a More Positive Experience for Insurance Policyholders

For policyholders, AOB reforms mean fewer headaches. The new laws discourage fraudulent activity, which in turn helps to stabilize or even lower insurance premiums. This creates a more positive and trustworthy environment for consumers. Beyond deterring fraud, these reforms also aim to streamline the claims process, making it easier for policyholders to understand their rights and responsibilities. The end result is a more transparent system that fosters trust, encourages responsible behavior, and ultimately leads to a more sustainable insurance market for everyone involved.

The Long-Term Impact of AOB Reforms on the Insurance Market in Florida

In the long run, these reforms could serve as a blueprint for other states grappling with similar AOB issues. By reducing the number of fraudulent claims and lawsuits, the insurance market in Florida becomes more stable and attractive to new entrants. This stability fosters competition and innovation, enriching the market with diverse offerings and cutting-edge solutions. It sets a precedent that could revolutionize how insurance claims are handled nationwide, elevating the industry’s standards for transparency, fairness, and efficiency.

How Does Del Toro Insurance’s Crisis Resilience Relate to Florida’s Assignment of Benefits Reforms?

Del Toro Insurance has always prioritized crisis resilience, and these reforms align well with our ethos of advocating for transparency and fairness. By supporting these changes, we contribute to a more stable insurance market, which is a win-win for all stakeholders involved. This stability is advantageous not only for us as an insurance provider but also for our esteemed clients. Our commitment to these principles resonates across various locations, benefiting our valued policyholders in Miami, Naples, Hialeah, Coral Gables, North Miami Beach, Cutler Bay, Palmetto Bay, Homestead, Margate, and Hialeah Gardens, FL.

Why Car Insurance May Go Up With Florida No-Fault Law

Individuals in Florida are bracing for a potentially significant increase in their

Ensuring Fairness: Striking A Balance In Insurance Lawsuits In Florida

Most homeowners and home insurance companies in the state of Florida have

What Is Windstorm Insurance For Your Condos In Florida?

Florida is a beautiful state, but it also has some extreme weather

Windstorm Insurance For Condos: A New Option For Affordable Coverage In Florida

Condos are popular in Florida and throughout most of the country. However,

You can see how this popup was set up in our step-by-step guide: https://wppopupmaker.com/guides/auto-opening-announcement-popups/

OPEN ENROLLMENT IS HERE!

GET AFFORDABLE HEALTH INSURANCE TODAY

OPEN ENROLLMENT, CALL (786) 369-1205

Apply Today

(239) 330-1494

In July of 2019, Florida’s new assignment of benefits law went into effect and is applicable to residential and commercial property insurance policies. [Fla.Stat. 627.7152(1)(b)] The new law has something for everyone: insurer, insured persons or entities (typically home and property owners) and benefits assignees (typically contractors or others providing services to protect, repair, restore, or replace property or to mitigate against further damage).

Before discussing the new law, it is important to understand what an assignment of benefits is and how it works. An assignment of benefits (“AOB”) is a contractual agreement between a property owner and a contractor after the property has suffered an insured loss whereby the contractor agrees to perform necessary repair work and seek payment directly from the insurer. The principal benefits of the AOB are the reduction or elimination of the requirement for the property owner to make up front payment for the work (other than the deductible) and then seek reimbursement from the insurer. Also, the AOB protocol usually reduces, if not eliminates, the property owner’s need to interact with the insurance company, as the construction company takes over the role and works to come to an agreement with the insurance company (ostensibly on the property owners behalf) on the proper scope of work and the appropriate payment therefore.

So what could possibly go wrong? Often times nothing. The work is done, the property is repaired, the contractor is paid, and everyone is happy. Many contractors believe the AOB mechanism is an important option for property owners to get critical repairs done while waiting for the insurer to settle their claim without having to make payments up front.

However, things can and do go wrong. Problems arise when homeowners sign assignment of benefit agreements and work is not completed in a timely manner. Homeowners can face difficulties getting contractors to address issues of incomplete or improper work, especially if the contractor has already submitted the claim to the insurer and received payment under the assignment of benefits agreement.

Contractors can also face challenges if the insurer does not want to honor the AOB. Insurers are sometimes reluctant to communicate with a contractor directly, insisting that everything go through the owner. Contractors may also face difficulties if the needed work turns out to be more involved and/or more expensive than first estimated.

Florida’s new AOB law attempts to address these issues and more. Insurers can now issue policies prohibiting the use of AOBs altogether. [Fla. Stat. 627.7153(2)] However, insurers are required to also offer policies providing the same coverage without the AOB prohibition. Policies prohibiting AOBs must be offered a lower price than those which do not.

Under the new law, property owners have the right to rescind an AOB without penalty within 14 days after execution of the agreement, at least 30 days after the date work on the property is scheduled to commence if the assignee has not substantially performed, or at least 30 days after the execution of the agreement if the agreement does not contain a commencement date and the assignee has not begun substantial work on the property. [Fla.Stat. 627.7152(2)(a)2] Property owners are protected against claims for payment by the contractor except for any deductible due under the policy, any betterment to the property that is approved by the owner, and any contracted work performed before the AOB is rescinded. Property owners also get the protection of a warning which must be in every assignment of benefits agreement in 18 point, uppercase, boldface type, warning the owner “YOU ARE AGREEING TO GIVE UP CERTAIN RIGHTS … .” [Fla.Stat. 627.7152(2)(a)6]

What do the assignees of this new law get? They get a long list of requirements which, if not met, make the AOB unenforceable. The written agreement must contain certain provisions including: i) the right to rescind; ii) a requirement for the assignee to provide a copy of the agreement to the insured within 3 business days of execution; iii) an itemized cost estimate of the services to be performed; iv) the AOB must only relate to work that protects, repairs, restores, or replaces a dwelling or structure or that mitigates against further damage to the property; and v) contain the warning cited above. (CITE TO THE SPECIFIC SECTION WITH HYPERLINK) Additionally, a contractor or other assignee must indemnify the assignor (property owner) from all liabilities should the policy subject to the AOB prohibit the assignment of benefits. [Fla.Stat. 627.7152(2)(a)1-6]

Whether you are a contractor concerned about your AOB being enforceable in a dispute with an insurer or insured or if you are a property owner having difficulty getting satisfactory performance from a contractor to whom you have assigned your benefits, Boatman Ricci is here to help. Contact us today to schedule an initial consultation at (239) 330-1494.

Part two of this blog will address the requirements and procedures under the new AOB law for when disputes arise.

By: Joseph A. Bare Esq

* * * * * * * * * *

THIS BLOG IS INTENDED FOR GENERAL INFORMATION PURPOSES ONLY. IT DOES NOT CONSTITUTE LEGAL ADVICE. THE READER SHOULD CONSULT WITH KNOWLEDGEABLE LEGAL COUNSEL TO DETERMINE HOW APPLICABLE LAWS APPLY TO SPECIFIC FACTS AND SITUATIONS. BLOG POSTS ARE BASED ON THE MOST CURRENT INFORMATION AT THE TIME THEY ARE WRITTEN. SINCE IT IS POSSIBLE THAT THE LAWS OR OTHER CIRCUMSTANCES MAY HAVE CHANGED SINCE PUBLICATION, PLEASE CALL US TO DISCUSS ANY ACTION YOU MAY BE CONSIDERING AS A RESULT OF READING THIS BLOG.

#BoatmanRicci #NaplesAttorney #ChristianAttorney #ChristianLawyer

Cozen O'Connor's Property Insurance Law Observer

Florida’s “Assignment of Benefits” Bill: A Guide Through the New Statutory Framework

Florida H.B. 7065 , expected to take effect July 1, 2019, makes several key statutory changes designed to curb AOB practices. We discuss a few of those highlights here.

The bill establishes several new sections of the Florida Statutes, including Fla. Stat. § 627.7152. § 627.7152(2)(a) sets requirements for a proper assignment of benefits:

627.7152 Assignment agreements.—

(2)(a) An assignment agreement must:

1) Be in writing and executed by and between the assignor and the assignee.

2) Contain a provision that allows the assignor to rescind the assignment agreement without a penalty or fee by submitting a written notice of rescission signed by the assignor to the assignee within 14 days after the execution of the agreement, at least 30 days after the date work on the property is scheduled to commence if the assignee has not substantially performed, or at least 30 days after the execution of the agreement if the agreement does not contain a commencement date and the assignee has not begun substantial work on the property.

3) Contain a provision requiring the assignee to provide a copy of the executed assignment agreement to the insurer within 3 business days after the date on which the assignment agreement is executed or the date on which work begins, whichever is earlier. . . .

4) Contain a written, itemized, per-unit cost estimate of the services to be performed by the assignee. . . .

Under § 627.7152(2)(a), contractors will no longer be able to blindside their customers and insurers with exorbitant bills with the expectation that an insurance company will eventually pay it. Now, contractors will be required to provide detailed estimates in advance of performing the work in order to effectively obtain an assignment of insurance benefits. Further, the assignee must promptly notify the insurer of the assignment. Insurers will now be able to monitor costs as they are incurred and ensure contractors are not performing unnecessary repairs.

In the event of litigation, § 627.7152(3) addresses the burden of the assignee:

(3) In a claim arising under an assignment agreement, an assignee has the burden to demonstrate that the insurer is not prejudiced by the assignee’s failure to:

(a) Maintain records of all services provided under the assignment agreement.

(b) Cooperate with the insurer in the claim investigation.

(c) Provide the insurer with requested records and documents related to the services provided, and permit the insurer to make copies of such records and documents.

(d) Deliver a copy of the executed assignment agreement to the insurer within 3 business days after executing the assignment agreement or work has begun, whichever is earlier.

Like a policyholder, assignees must cooperate with the insurer. If an assignee fails to maintain records, provide the insurer requested documents, or deliver the agreement as required by § 627.7152(2)(a), the assignee will bear the burden in litigation of demonstrating a lack of prejudice to the insurer.

In order to even get into a courtroom, however, § 627.7152(9)(a) requires assignees to serve written notice at least 10 business days prior to filing suit. The notice must include, among other things, the amount of damages in dispute, the amount claimed, and a pre-suit settlement demand. The assignee must also provide a detailed written invoice or estimate of services, the number of labor hours, and in the case of work performed, proof that the work has been performed in accordance with “accepted industry standards.” Upon receipt of the notice,

(b) An insurer must respond in writing to the notice within 10 business days after receiving the notice specified in paragraph (a) by making a presuit settlement offer or requiring the assignee to participate in appraisal or other method of alternative dispute resolution under the policy. An insurer must have a procedure for the prompt investigation, review, and evaluation of the dispute stated in the notice and must investigate each claim contained in the notice in accordance with the Florida Insurance Code.

Insurers have an opportunity to avoid litigation through negotiation or appraisal. Assignees are encouraged to make reasonable settlement demands and to consider reasonable offers because failure to do so can trigger an award of attorney’s fees in the insurer’s favor:

(10) Notwithstanding any other provision of law, in a suit related to an assignment agreement for post-loss claims arising under a residential or commercial property insurance policy, attorney fees and costs may be recovered by an assignee only under s. 57.105 and this subsection.

(a) If the difference between the judgment obtained by the assignee and the presuit settlement offer is:

1) Less than 25 percent of the disputed amount, the insurer is entitled to an award of reasonable attorney fees.

2) At least 25 percent but less than 50 percent of the disputed amount, no party is entitled to an award of attorney fees.

3) At least 50 percent of the disputed amount, the assignee is entitled to an award of reasonable attorney fees.

Fla. Stat. § 627.428 is the one way attorney’s fee shifting statute in Florida’s insurance code. This statute generously provides fee-shifting to “prevailing” policyholders and claimants, including following negotiated settlements in contravention of the general American rule. Under the new AOB statute, § 627.7152(10), awards of attorney’s fees are discretionary in suits against insurers by assignees. Further, § 627.7152(10) requires assignees to obtain a judgment of an amount at least 50% greater than the insurer’s pre-suit settlement offer in order to obtain an award of attorney’s fees. For additional encouragement to accept reasonable settlement offers, assignees who fail to obtain a judgment at least 25% greater may be required to pay the insurer’s attorney’s fees.

Last, insurers can avoid “assignment of benefits” issues altogether by prohibiting AOBs in their policies. The bill creates a new § 627.7153, which allows “[a]n insurer may make available a policy that restricts in whole or in part an insured’s right to execute an assignment agreement” if certain conditions are met. Those conditions include that the insurer must also provide unrestricted coverage, the restricted policy is available at a lower cost than the unrestricted policy, policies prohibiting assignment in whole cost less than policies prohibiting assignment in part, and restricted policies must contain notice on its face.

With the passage of this new law, Florida will see a new litigation landscape in the area of assignment of benefits. The law is prospective only, so it will not technically impact existing AOB litigation. However, through passage of this law, Florida has disincentivized unscrupulous contractors and leveled the courtroom playing field and the presently rampant AOB litigation should begin to fade. Ultimately, these changes are expected to benefit Florida policyholders with reduced insurance premiums.

Thank you for registering. Please check your email to confirm your subscription.

propertyinsurancelawobserver

Court Says Builder’s Risk Policy Limited Coverage for Additional Insureds
What’s in a Name (Insured)? Pennsylvania Federal Court Holds Homeowners’ Insurance Policy’s Requirement to Submit to Examination Under Oath Applies Only to Named Insured
Court Differentiates Vandalism from Theft in First Party Insurance Policy
Court Finds No Coverage for Loss Caused by Water Back Up Through a Storm Drain
Court Finds Policy Term, “Windstorm,” to be Ambiguous in Coverage Dispute Involving Tornado
Court Issues First LEG3 Defects Exclusion Decision
There’s No Place Like Home! Kansas Federal Court Holds Homeowner’s Policy Coverage Requires Policyholder to Physically Reside at Residence
Southern District of Texas Holds that Appraisal Award is Inconclusive of Whether a Loss is Covered
Florida Enacts Broad Insurance Reforms Focusing on Bad Faith
Louisiana Supreme Court Reverses a Rare State Court of Appeals Win for COVID-19 Business Interruption Claimant
March 2024 (4)
February 2024 (1)
January 2024 (1)
November 2023 (1)
August 2023 (1)
March 2023 (2)
February 2023 (1)
December 2022 (2)
October 2022 (1)
September 2022 (1)
August 2022 (2)
July 2022 (2)
June 2022 (2)
May 2022 (1)
April 2022 (2)
March 2022 (2)
February 2022 (1)
January 2022 (2)
December 2021 (1)
November 2021 (4)
October 2021 (2)
September 2021 (3)
August 2021 (2)
July 2021 (4)
June 2021 (5)
May 2021 (1)
April 2021 (2)
January 2021 (2)
November 2020 (1)
October 2020 (3)
August 2020 (2)
April 2020 (1)
March 2020 (2)
October 2019 (3)
July 2019 (2)
June 2019 (1)
May 2019 (3)
April 2019 (2)
December 2018 (1)
June 2018 (1)
March 2018 (2)
January 2018 (1)
October 2017 (1)
August 2017 (1)
July 2017 (1)
June 2017 (2)
February 2017 (1)
January 2017 (3)
October 2016 (1)
September 2016 (2)
August 2016 (2)
July 2016 (4)
June 2016 (2)
May 2016 (1)
April 2016 (1)
March 2016 (2)
February 2016 (2)
January 2016 (2)
December 2015 (3)
November 2015 (11)
October 2015 (7)
September 2015 (5)
August 2015 (4)
July 2015 (9)
June 2015 (5)
May 2015 (7)
April 2015 (7)
March 2015 (6)
February 2015 (5)
January 2015 (3)
December 2014 (6)
November 2014 (3)
October 2014 (5)
September 2014 (4)
August 2014 (5)
July 2014 (6)
June 2014 (4)
May 2014 (3)
April 2014 (3)
March 2014 (4)
February 2014 (2)
January 2014 (3)
December 2013 (1)
November 2013 (1)
October 2013 (1)
Act of Nature
Actual Cash Value
Additional Insureds
Anti-Concurrent Causation
Arbitration and Appraisal
Arson and Fraud
Assignment of Benefits
Builders' Risk
Burden of Proof
Contingent Business Interruption
Delay in Completion
Cancellation
Hurricane Ike
Hurricane Irene
Hurricane Wilma
Superstorm Sandy
Theft or Dishonesty
Acts or Decisions
Contamination
Decomposition
Earth Movement
Faulty Workmanship or Design
Hidden Decay
Inherent Vice and Latent Defect
Mechanical Breakdown
Microorganisma
Microorganisms
Order of Civil Authority
Ordinance or Law
Particulates
Product Recall
Seepage or Leakage
Settling or Cracking
Sewer Backup
Smoke and Soot
Vacancy and Unoccupancy
Wear and Tear
Claim Investigation
Co-Insureds
Contamination and Product Recall
Cooperation
Cyber Insurance
Depreciation
Direct Physical Loss or Damage
Earthquake Insurance
Efficient Proximate Cause
Ensuing Loss
Examinations Under Oath
Extra Expense
Federal Appeals
Flood Insurance
Fraud and False Swearing
Green Insurance
Homeowners Coverage
Increase in Hazard
Insurable Interest
Insured Premises
Investigation
Loss Adjustment
Loss Payees
Moral Hazard
Newly-Acquired Property
Preservation and Protection
Proof of Loss
Property Insurance Reform
Protective Safeguards
Public Adjusters
Reasonable Expectations
Reinstatement
Reinsurance
Replacement Cost
Sue and Labor
Suit Limitation
Terrorism Insurance
U.S. Legal System
Uncategorized
Unfair Insurance Practices
Vacant or Unoccupied

Equitable Assignment: Everything You Need to Know

An equitable assignment is one that does not fulfill the statutory criteria for a legal assignment, but is binding and upheld by the courts in the interest of equability, justice, and fairness. 3 min read updated on February 01, 2023

An equitable assignment is one that does not fulfill the statutory criteria for a legal assignment, but is binding and upheld by the courts in the interest of equability, justice, and fairness.

Equitable Assignment

An equitable assignment may not appear to be self-evident by the law's standard, but it presents the assignee with a title that is protected and recognized in equity. It's based on the essence of a declaration of trust; specifically, essential fairness and natural justice. As long as there is valuable consideration involved, it does not matter if a formal agreement is signed. There needs to be some sort of intent displayed from one party to assign and the other party to receive.

The evaluation of a righteous equitable assignment is completed by determining if a debtor would rationally pay the debt to another party alleging to be the assignee. Equitable assignments can be created by:

The assignor informing the assignee that they transferred a right to them
The assignor instructing the other party to release their obligation from the assignee and place it instead on the assignor

The only part of an agreement that can be assigned is the benefit. Generally speaking, there is no prerequisite for the written notice to be received or given. The significant characteristic that separates an equitable assignment from a legal assignment is that most of the time, an equitable assignee may not take action against a third party. Instead, it must rely on the guidelines governing equitable assignments. In other words, the equitable assignee must team up with the assignor to take action.

The Doctrine of Equitable Assignment in Wisconsin

In Dow Family LLC v. PHH Mortgage Corp ., the Wisconsin Supreme Court issued in favor of the doctrine of equitable assignment. The case was similar to many other foreclosure cases, except this one came with a twist. Essentially, Dow Family LLC purchased a property and the property owner insisted the mortgage on the property had been paid off. However, in actuality, it wasn't.

Prior to the sale, the mortgage on the property was with PHH Mortgage Corp. When PHH went to foreclose on the mortgage, Dow Family LLC contested it. There was one specific rebuttal that caught the attention of the Wisconsin Supreme Court. The official mortgage on record was with MERS, an appointee for the original lender, U.S. Bank.

Dow argued that PHH couldn't foreclose on the property because the true owner was MERS. Essentially, Dow was stating that the mortgage was never assigned to PHH. Based on this argument, PHH utilized the doctrine of equitable assignment.

Based on a case from 1859, Croft v. Bunster, the court determined that the security for a note is equitably assigned when the note is assigned without a need for an independent, written assignment. Additionally, Dow contended that the statute of frauds prohibits the utilization of the doctrine, mainly because it claimed every assignment on a property must be formally recorded.

During the case, Dow argued that the MERS system, which stored the data regarding the mortgage, was fundamentally flawed. According to the court, the statute of frauds was satisfied because the equitable assignment was in accordance with the operation of law. Most importantly, the court avoided all consideration regarding the MERS system, concluding it was not significant in their decision.

The outcome was a major win for lenders, as they were relying on the doctrine specifically for these types of circumstances.

Most experts agree that this outcome makes sense in the current mortgage-lending environment. This is due to the fact that it is still quite common for mortgages to be bundled up into mortgage-backed securities and sold on the secondary market.

Many economists claim that by not requiring mortgages to be recorded each time a transfer is completed, the loans are more easily marketed to investors. Additionally, debtors know who their current mortgage company is because the new lender must always notify the current borrower in order to receive payment. It was determined that recording and documenting the mortgage merely provides a signal to the rest of the world that the property owner secures a debt.

If you need help with an equitable assignment, you can post your job on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

Hire the top business lawyers and save up to 60% on legal fees

Content Approved by UpCounsel

Assignment Legal Definition
Assignment Law
What Is the Definition of Assigns
Legal Assignment
Assignment and Novation Agreement: What You Need to Know
Assignment of Rights Example
Assignment of Rights and Obligations Under a Contract
Partial Assignment of Contract
Assignment Contract Law
What is an Assignment and Assumption Agreement

Insurance: The Basics

About the Industry
Auto Insurance
Homeowners + Renters Insurance
Life Insurance
Financial Planning
Business Insurance
Disasters + Preparedness
Thought Leadership
Other Insurance Topics
Research + Data
Catastrophes
Crime + Fraud
Insurance Industry
Life + Health

Resource Center

Resilience Accelerator
Event Calendar
I.I.I. Glossary
I.I.I. Store
Latest Studies
Presentations
Publications
The I.I.I. Insurance Blog
Video Library
Learn More About Membership
Register for a Member Account
Learn More About Amplify

EN ESPAÑOL

Conceptos Básicos de Seguros

Connect With Us

Popular search terms
Home + Renters
Popular Topics
Disaster + Preparation

Popular Media

Please sign in to access member exclusive content.

Forgot Password?

Don't Have an Account? Register Now

Learn more about membership

Florida's assignment of beneﬁts crisis

Runaway litigation is spreading, and consumers are paying the price.

DOWNLOAD TO PDF

It is a standard practice throughout the insurance world: As a convenience, a policyholder grants a third party – an auto glass repair company, a medical practitioner, a home contractor – permission to directly bill an insurer to settle a claim. That practice is called an assignment of benefits, usually known by the acronym, AOB.

In Florida, abuse of AOBs has fueled an insurance crisis. The state’s legal environment has encouraged vendors and their attorneys to solicit unwarranted AOBs from tens of thousands of Floridians, conduct unnecessary or unnecessarily expensive work, then file tens of thousands of lawsuits against insurance companies that deny or dispute the claims. This mini-industry has cost consumers billions of dollars as they are forced to pay higher premiums to cover needless repairs and excessive legal fees. And consumers often do not even know that their claims are driving these cost increases.

The abuse therefore acts somewhat like a hidden tax on consumers, helping to increase what are already some of the highest insurance premiums in the country.

This report discusses how AOB abuse works, how and why it is spreading, and how it is contributing to higher insurance costs for Florida consumers.

You May Also Like: Download the accompanying PowerPoint presentation here .

Please click on the file name below to view the white paper in PDF format. You will need Adobe Acrobat Reader to view the file.

Download aobfl_wp_031319.pdf

You can download Adobe Acrobat Reader, free of charge, from the Adobe website ( https://www.adobe.com/products/acrobat/readstep.html ).

Note: Printer fonts may vary by browser and version of Adobe Reader.

Florida Appellate Court Issues Opinion on Validity of Assignment of Benefits in Property Insurance Claim

As the Florida Legislature and Florida courts continue to grapple with the issue of assignments of benefits in property claims, the Fourth District Court of Appeal recently weighed in on a matter involving the validity of a purported assignment in QBE Specialty Insurance Co. v. United Reconstruction Group Inc .

The case involved a water damage claim at a home insured by QBE Specialty Insurance Co. United Reconstruction Group was hired to perform emergency water mitigation services. United claimed that the homeowner executed a contract that included an assignment of benefits of the homeowner’s insurance policy to United. While the contract did have a signature on it, the block for “customer print name” was left blank.

United submitted an invoice for $10,897.91 to QBE, along with a copy of the signed contract/assignment. A claims adjuster for QBE contacted United to negotiate the amount. Eventually, United agreed to $8,603.20. QBE issued the agreed payment to the insured and not United. Apparently, the insured cashed the check and did not remit the proceeds to United.

United, under the purported assignment from the insured, filed a breach of contract action against QBE. United alleged that QBE breached its “loss payment” provision of its insurance policy by not sending payment to United, which claimed it had a valid assignment, pursuant to the executed assignment. United alleged, alternatively, that it had an equitable assignment from the insured based on the services it performed on the insured’s property. In its response to the complaint, QBE raised an affirmative defense that the assignment was invalid as it was not signed by the insured.

United moved for summary judgment. In support of its motion, United provided an affidavit from one of its owners stating that United performed the services for the insured and that the insured executed, or caused to be executed, an assignment of benefits under the policy to United. United also filed a deposition transcript of QBE’s corporate representative in which the representative testified that QBE received the assignment before issuing payment to the insured, as well as the fact that a QBE claims adjuster had contacted United directly to negotiate the amount.

QBE filed a response in opposition to the summary judgment motion, arguing that the assignment was not signed by the insured. In support of its position, QBE submitted an affidavit of a forensic writing expert. The expert’s affidavit provided several findings that supported QBE’s position that the signature on the assignment was not the insured’s signature.

Although the trial court agreed that the forensic writing expert’s affidavit created an issue of fact, the trial court granted summary judgment in favor of United. The trial court held that “a valid assignment between the insured and [United] existed.” Notably, the trial court did not address what type of assignment (legal or equitable) United had obtained from the insured. QBE subsequently appealed.

The District Court of Appeal agreed with QBE that summary judgment was improper. The court noted that QBE properly raised the affirmative defense related to the lack of a valid assignment and that United did not provide any response to the forensic writing expert’s affidavit. Because there was a genuine issue of material fact as to whether the insured signed the assignment, it was an error for the trial court to grant summary judgment.

In addition, the court held that the mere fact that United performed the work on the home did not give rise to an equitable assignment, absent any evidence that the insured intended to assign his rights under the policy to United. Since there existed questions of fact as to whether the insured executed the assignment (i.e., intended to assign his rights under the policy to United), summary judgment in favor of United would have been improper as to any determination by the trial court that United had obtained an equitable assignment from the insured. The case was subsequently remanded to the trial court.

Latest Posts

11th Circuit: Another GoDaddy TCPA Class Settlement Is a No-Go
Current Standings of AI Guidance and Requirements by State
Racing Ahead: Privacy, Cybersecurity, and AI Heats for the Life Insurance Industry
Prepping for the Panel (Or Not)
Cinch Up! AI Enforcement Starts With Washing Charges

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

Refine your interests »

Written by:

PUBLISH YOUR CONTENT ON JD SUPRA NOW

Increased visibility
Actionable analytics
Ongoing guidance

Published In:

Carlton fields on:.

"My best business intelligence, in one easy email…"

Florida's Assignment of Benefits Law Updated to Better Protect Consumers

By dave bruns , july 03, 2019 11:02 am.

Florida property owners, listen up: The rules have changed on how you can get your home repaired after a hurricane or other natural disaster by letting a contractor deal directly with your insurance company. The legislation, CS/HB 7065, is the biggest change to Florida law on assignment of insurance benefits in years. Whenever Florida is struck by a hurricane or other natural disaster, contractors flock to the area, going door to door and offering to start immediate repairs on homes and businesses if the property owner will sign over their insurance benefits to the contractor. These “assignment of benefits” contracts, also known as AOB, can result in a high-quality repair at a fair price by a licensed, insured contractor. But in recent years, insurers have been pressuring lawmakers to rein in abuses of these AOB contracts, especially lawsuits arising from disputes between contractors and insurers over how much to pay for repairs. In early 2019, Florida insurance regulators testified to the Legislature that that such lawsuits were skyrocketing, driving up insurance costs and threatening to drive some insurers out of the Florida market. Meanwhile, property owners have complained that insurers take too long to inspect property, approve repairs or authorize immediate temporary repairs to prevent future damage. The new law sets new time limits for insurers, property owners and contractors. Here are some of the major provisions of the new law:

If you sign an AOB agreement with a contractor, the contractor (called an “assignee” in the new law) must provide your insurer with an itemized, per-unit cost estimate of the work to be done. The contractor also must provide the insurer a copy of the AOB agreement within three days.
Often, roof damage to a home or business can result in water leaks, which can later turn into major mold and mildew problems. Homeowners sometimes agree to sign over benefits to contractors for a quick temporary repair to head off future loss. The new law limits these temporary repair agreements to $3000 or 1 percent of the coverage limit on such storm damage in your policy, whichever is greater.
If a dispute arises between the insurer and the assignee over how much of the loss will be covered, the assignee has to notify the insurer of intent to file a lawsuit over the dispute at least 10 days before the lawsuit is filed. Insurers have 10 days to respond, but insurers can get extra time if an emergency has been declared in your area because of a storm.
If your contractor sues your insurer to force them to pay more than they’re offering for the repair, and the final judgment in the lawsuit is up to 25 percent more than the insurer’s initial offer, your insurance company now will have the right to collect their attorney’s fees from the assignee. If the final judgment in a lawsuit is between 25 and 50 percent higher than the insurer’s initial offer, neither side can recover attorney’s fees. If the insurer’s initial offer was more than 50 percent lower than the final judgment in a lawsuit, the assignee can recover attorney’s fees from the insurer. This provision was meant to discourage lawsuits in cases where the disputed portion of the insurance settlement is relatively minor. However, if an insurer doesn’t inspect the property or authorize repairs within seven days of notification of a loss, the insurer must give up its right to recover attorney’s fees from a resulting lawsuit.
Previously, Florida courts had held that you had a right to sign over your insurance benefits to a contractor after a loss. Under the new law, insurers now can sell you an insurance policy that doesn’t allow you to assign your benefits to a contractor, although the insurer also must offer you a policy that does allow AOB contracts – possibly at a higher cost.

Read the Legislature’s analysis of the bill’s provisions here.

Why Hire FORC Counsel
Member Directory
By-Laws & Mission
Advanced Search
Event Calendar
Member Criteria
Member Applications

ASSIGNMENT OF HOMEOWNERS POLICY BENEFITS IN FLORIDA

Share on Facebook
Share on Twitter
Share on LinkedIn
More options
StumbleUpon

“Abuse of assignment of benefits (AOB) from water loss claims has become a full-blown Florida insurance crisis that will mean higher insurance rates next year and for the foreseeable future for every Florida policyholder.” [1] Some have speculated that rate hikes of as much as $1 billion will be needed. [2] Actuarially sound rate increases have been indicated as high as 189% for Southeast Florida, and private insurers will not write coverage where abuse is rampant. In March 2016 alone, Citizens Property Insurance Corporation had 1,000 suits based on AOB; the highest month in the past two years though Citizens’ policy count dropped by two-thirds during those two years. [3] Eighty-five percent of all suits involved an attorney before the claim was even reported to the insurer. [4]

An AOB is a legal device used to transfer the property rights of one party to another, such as the right to receive funds based on an occurrence. Service providers, such as water remediation companies and roofing contractors, rely on a line of Florida case law to “stand in the shoes” of the policyholder and directly access policy benefits without accepting the policyholder’s responsibility to comply with various concomitant duties under the policy after a loss.

Some argue that this legal arrangement allows an unscrupulous service provider to submit inflated or improper claims, causing pre-conceived legal battles between the service provider and the insurance company, unbeknownst to the policyholder. It has been reported that AOB lawsuits have increased by at least 16,000% since 2000, while all suits against insurers increased by 183% since then. [5] The attorney’s fee shifting statute in Florida’s Insurance Code has played no small part in encouraging attorneys and service providers to file such suits.

Background on Assignment of Benefits

An assignment is the voluntary act of transferring an interest. [6] “All contractual rights are assignable unless the contract prohibits the assignment , the contract involves obligations of a personal nature, or public policy dictates against the assignment .” [7] Once an assignment has been made, “the assignor no longer has a right to enforce the interest because the assignee has obtained all rights to the thing assigned.” [8] As such, the assignee may pursue causes of action deriving from the contract. [9]

In 1959, Florida codified the insured’s lawful ability to assign a policy . Section 627.422, Florida Statutes, provides that, “ A policy may be assignable, or not assignable, as provided by its terms.” [10] Thus, a provision in an insurance contract prohibiting assignment of the policy is enforceable under the plain language of Section 627.422.

In Maryland Casualty Company v. Murphy , [11] Florida’s Third District Court of Appeal held that Section 627.422 required that a “no assignment” clause be included in a policy in order to preclude assignments. “Where a policy is silent on the matter of assignment, then the silence creates an ambiguity. Generally, in contracts of insurance, ambiguities are to be construed against the insurer and in favor of the insured.” [12] Thus, to preclude assignment, the policy must unambiguously prohibit assignment.

The purpose of an anti-assignment provision is to protect an insurer against “unbargained-for risk.” [13] An assignment of the policy, or rights under the policy before a loss is incurred, would transfer the insurer’s contractual relationship to a party with whom the insurer never intended to contract or with whom it may have contracted under different terms. The insurer’s ability to proscribe the unilateral assignment of its contract thus protects the insurer from unforeseen exposure and increased liability.

In contrast, an anti-assignment provision has routinely been held not to bar an insured’s assignment of an after-loss claim. [14] A post-loss assignment of a benefit under a policy, such as the right to seek payment under a policy for mitigation services rendered, will not constitute an assignment of the policy to a third-party assignee. [15] Nearly a century ago, the Florida Supreme Court declared in West Florida Grocery Company v. Teutonia Fire Insurance Company that, “it is a well-settled rule that the provision in a policy relative to the consent of the insurer to the transfer of an interest therein does not apply to an assignment after loss .” [16] The court, though, provided no support for its indication of this “rule” as being “well-settled.”

In Teutonia , the assignment, not a policy provision, included the phrase “subject to the consent of the insurer.” The court deemed this condition “superfluous” as not affecting the validity of the assignment. Helpful to this conclusion was the fact that no party challenged the validity of the assignment; and, the insurer deposited the full amount of the claim, upon filing its bill of interpleader, which the court construed as “recognizing and giving tacit consent to the assignment.” [17] The court reaffirmed this “well-settled rule” in 1998 when it indicated that “an insured may assign insurance proceeds to a third party after a loss, even without the consent of the insurer.” [18] Thus, an assignment made after the loss generally is valid even if the contract states otherwise. [19]

Assignments of policies and post-loss AOBs receive differing treatment due to the nature of the contract. An insurance contract is a promise by the insurer to perform upon the occurrence of a determinable contingency. In trade, the insured pays for that promise and fulfills her obligations and duties under the contract. The insurer’s liability to make good on its promise is established as of the time of a covered loss. [20] Thus, the insured’s post-loss assignment of his correlative right does not affect the insurer’s liability for payment. The insurer’s duty under the policy is already established. [21] The reason for restricting assignment of the policy, i.e. “unbargained-for risk,” has ceased. Accordingly, all things being equal , the insurer’s risk should not increase by changing the identity of the party to whom payment is to be made under the policy.

The insured’s claim ripens into a right to recovery under the policy as a chose in action. A chose in action is a proprietary right, such as a debt owed by another person. [22] A chose in action arising out of a contract is assignable and “may be sued upon and recovered by the assignee in his own name and right.” [23] Thus, the right to a debt owed to another person includes the right to bring an action to recover on that debt. Where there is no provision forbidding assignment, “an insurance policy may be assigned as any other chose in action,” [24] unless “ public policy dictates against the assignment.” [25]

The Fourth District Court of Appeal found such public policy in Kohl v. Blue Cross Blue Shield of Florida, Inc. , [26] to enforce a clause limiting AOBs under a health insurance contract. As a new patient of Dr. Kohl, the insured executed an AOB prepared by Dr. Kohl. The AOB purportedly assigned to Dr. Kohl the insured’s right to receive all health insurance benefits under her policy with Blue Cross. Though eligible, Dr. Kohl was not a participating provider in the Blue Cross network of physicians: he had no provider agreement with Blue Cross to participate in the network. Dr. Kohl performed covered chiropractic services for the insured. The Blue Cross policy included an anti-assignment provision which read as follows:

The insured is responsible for filing claims for services and supplies rendered by eligible Non-PPC Providers. BCBSF’s payment, if any, for covered services rendered by an eligible Non-PPC Provider will always be made directly to the Insured. BCBSF will not honor any assignment to an eligible Non-PPC Provider, including without limitation, any of the following assignments: an assignment of the benefits due under this Contract; an assignment of the right to receive payments under this Contract; or an assignment of a claim for damages resulting from a breach, or any alleged breach of this Contract. [27]

In accordance with this provision, Blue Cross paid all claimed benefits directly to the insured. The insured failed to pay Dr. Kohl though Dr. Kohl submitted benefit claim forms to Blue Cross. The court found the policy’s AOB provision to be unambiguous and, despite the “well-settled rule” disfavoring conditional AOB clauses, “public policy favors the type of anti-assignment clause at issue in this case.” [28] The court reasoned that, “Anti-assignment clauses prohibiting an insured’s assignments to out-of-network medical providers are valuable tools in persuading health [care] providers to keep their costs down and as such override the general policy favoring the free alienability of choses in action.” [29] To further substantiate its position, the court culled the following from cases in other states:

The anti-assignment clause has been deemed to advance the overarching public interest in limiting health care costs for, if the patient could assign his or her rights to payment to outside medical providers, it would undercut the pre-arranged costs with in-network providers that are relied upon by nonprofit health services corporations in deciding the premium amount ... The benefit to this system is that the insurer is able to impose cost restraints on the participating health care providers who, in return, receive quick and direct payment from the insurer . If the patient could obtain care from a non-participating [provider] and assign the patient’s right to be reimbursed under a group policy, in the teeth of an anti-assignment clause, this direct payment inducement to become a participating [provider] would be weakened or eliminated. [30]

Thus, the consensual management of healthcare costs, as a matter of public policy , overrode the “well-settled rule” to enforce AOBs in favor of providers without contract incentives to keep costs down. Direct payment served the public interest of providing healthcare at a responsible cost. Consequently, these pre-arranged costs directly affected decisions regarding premium amounts.

Also, Florida courts have extended the constitutional protection afforded homestead property [31] to the proceeds of insurance recovery from that property. In Teutonia , the court enforced the insured’s homestead exemption in any residue in excess of the amount he was indebted to West Florida Grocery, as the assignee, plus attorney’s fees and court costs. [32] Recently, a Florida court entered summary judgment in favor of an insurer due to an invalid AOB by virtue of this constitutional protection. In reaching its decision, the court ruled that, “Under Florida law, the proceeds of any insurance recovery from homestead property are constitutionally protected to the same extent as the property itself, and a homeowner cannot be divested of those proceeds through an unsecured agreement.” [33]

Post-loss assignments are susceptible to other possible legal challenge, such as when the assignment violates the public adjuster statute, [34] when the assignment violates the statute governing insurable interests, [35] when the assignment fails to give the service provider control over the claim, [36] or when the language of the assignment is so broad that it constitutes an assignment of the entire policy in violation of a valid anti-assignment clause supported by Section 627.422. Further, no case eliminates the insured’s duty of compliance with all policy conditions, for an assignee to recover benefits on a covered loss. [37]

One-Way Attorney’s Fees

Under Florida common law, each party generally bears its own attorney’s fees unless a contract or statute provides otherwise. [38] Section 627.428, Florida Statutes, serves as a one way “fee shifting” statute that has fueled the rapid growth of AOB lawsuits. That section provides:

Upon the rendition of a judgment or decree by any of the courts of this state against an insurer and in favor of any named or omnibus insured or the named beneficiary under a policy or contract executed by the insurer, the trial court or, in the event of an appeal in which the insured or beneficiary prevails, the appellate court shall adjudge or decree against the insurer and in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured’s or beneficiary’s attorney prosecuting the suit in which the recovery is had. [39]

This statute “direct[s] the courts to assess attorney’s fees against only one side of the litigation in certain types of actions.” [40] As such, “the statute is a one-way street offering the potential for attorney’s fees only to the insured or beneficiary.” [41] An award under this section is available “to the contracting insured, the insured’s estate, specifically named policy beneficiaries, and third parties who claim policy coverage by assignment from the insured .” [42]

Section 627.428 clearly provides that attorney’s fees shall be awarded against the insurer when judgment is rendered in favor of an insured. Florida courts have extended this statute to impose these fees when an insurer settles a suit on the claim. “When the insurance company has agreed to settle a disputed case, it has, in effect, declined to defend its position in the pending suit. Thus, the payment of the claim is, indeed, the functional equivalent of a confession of judgment or a verdict in favor of the insured.” [43] Further, the insured may recover attorney’s fees incurred in determining whether a valid settlement agreement exists at all, such as an oral offer to settle for a certain amount. [44] The reasoning here is that “it would be incongruous to permit fees incurred in reaching a settlement agreement, but not allow fees to determine whether the parties reached a binding agreement in the first place.” [45] Thus, a person who takes an AOB is entitled to attorney’s fees if that assignee prevails in an action against an insurer, whether by judgment or by settlement of a claim subject to litigation. [46]

An award of fees under the statute may even be based on an implied assignment, under unique circumstances. In All Ways Reliable Building Maintenance, Inc. v. Moore , [47] a house repair company brought suit against both the homeowner and the insurer that covered the owner’s house for fire damage. The homeowner filed a cross-claim arguing that the insurer was responsible because the insurer’s agent had preapproved All Ways’ estimate for the repairs. The trial court awarded judgments in favor of All Ways and the homeowner and approved an award of attorney’s fees to both parties. [48]

The court held that, despite being neither a named insured nor a named beneficiary under the policy, All Ways was entitled to an award of its attorney’s fees based on an implied assignment from the homeowner. Upon reflection, the court later advised that, to the extent that its decision in All Ways appeared to recognize an equitable basis for recovering attorney’s fees under Section 627.428, it limited that case to its unique facts. [49]

The purpose of Section 627.428 “is to discourage insurance companies from contesting valid claims, and to reimburse insureds for their attorney’s fees incurred when they must enforce in court their contract with the insurance company.” [50] The statute “level[s] the playing field so that the economic power of insurance companies is not so overwhelming that injustice may be encouraged because people will not have the necessary means to seek redress in the courts.” [51] However, the one-way imposition of attorney’s fees under this statute, intended to level the playing field for insureds, is now being assigned to service providers whose interests may not be aligned with those insureds it was designed to protect. The availability of attorney’s fees under Section 627.428 fuels and facilitates litigation by third parties rendering services under post-loss AOBs without consequence. In these cases, the plaintiff is not making the claim in the name of the insured but, instead, seeks attorney’s fees in his own right. In relation to AOB lawsuits, the fee statute no longer governs the relationship between the contracting parties as intended.

Empirical Data

The court, in One Call Property Services, Inc. v. Security Fire Insurance Company , noted that, “If studies show that these assignments are inviting fraud and abuse, then the legislature is in the best position to investigate and undertake comprehensive reform.” [52] The Florida Office of Insurance Regulation (OIR) and Citizens Property Insurance Corporation (Citizens), as well as others, have since conducted such studies.

On October 23, 2015, the OIR issued a data call to the top twenty-five insurers, based on policies in force as of June 30, 2015, writing homeowners and dwelling fire policies in the state. Other personal residential property insurers could voluntarily participate in the data call. The responding insurers represented 80.5% of these policies in the state. The overall purpose of the data call was to assist the OIR in evaluating the impact of Florida’s closed property claims as a result of AOBs for water or roof damage repair.

On February 8, 2016, the OIR released its Report, with Citizens reporting separately as to its data (discussed infra ). Claims with an AOB generally had at least 50% more severity than claims without an AOB. [53] The Report identified an increase of about 10% in claim severity from 2010 to 2015 for claims with an AOB, while the severity for claims without an AOB increased by only 1%. [54] With the exception of Southeast Florida, at least 50% of water claims were reported to the insurer within 3 days. [55] Since 2010, all regions of the state experienced increases in the amount of days it took to report claims to insurers. [56] Insurers responded that significant delays in the notification to insurers impeded insurer investigation of claims. “Anecdotally, the insurers have stated that in many cases they are not finding out about the claim until all of the final repairs have been made or when an attorney files a suit against the insurer.” [57]

Also at the beginning of 2016, Citizens released its report captioned “Non-Catastrophic Homeowners Water Claims.” Citizens reported that,

Non-litigated claims with AOB cost 74% more on average than claims without AOB in Tri-County [Miami-Dade, Broward and Palm Beach counties] and 116% more outside Tri-County. While the paid loss severity was higher for litigated claims with AOB than those without AOB, the differences were not as steep as for the non-litigated claims.

Litigated clams in the South East region are approximately 50% more expensive on average than elsewhere regardless of AOB. Separately, litigated claims are 182% more expensive on average statewide than non-litigated claims. [58]

Citizens concluded that, “The overall increase in litigation is related to an increase in the number of claims that are first being reported with representation (either an attorney and/or pubic adjuster), which is turn related to the use of AOB.” [59]

This data suggests that Section 627.428, coupled with AOBs unaffected by Section 627.422, has evolved into a tool for dissuading service providers and others from requiring insurer approval before rendering services rather than risk having to collect through litigation. The ability to recover attorney’s fees under Section 627.428 inherently incentivizes litigation in cases involving AOBs because an assignee can recover full attorney’s fees even if the award is small. [60]

Legislative Effort

The judiciary has noticed the increasing public policy implications of unrestrained litigation under the guise of AOBs. For instance, in Security First Insurance Company v. Florida Office of Insurance Regulation , [61] the First District Court of Appeal acknowledged Security First’s suggestion of abuse in the AOB process.

[W]e are not unmindful of the concerns that Security First expressed in support of its policy change, providing evidence that inflated or fraudulent post-loss claims filed by remediation companies exceeded by 30% comparable services; that policyholders may sign away their rights without understanding the implications; and that a “cottage industry” of “vendors, contractors, and attorneys” exists that use the “assignments of benefits and the threat of litigation” to “extract higher payments from insurers.” These concerns, however, are matters of policy that we are ill-suited to address. [62]

Bills have been filed during each of the past few legislative sessions to address these concerns. However, the Florida Legislature has been unable to pass legislation to address the statutory facilitation, as construed by various courts, of unhelpful AOB litigation. For example, Senate Bill 1064 was filed during the 2015 legislative session to amend the public adjuster statute’s exemption for certain contractor activity; and to void an assignment transferring authority to adjust, negotiate, or settle a claim. Second, the bill sought to amend Florida’s insurable interest statute (Section 627.405) by prohibiting assignment of an insurable interest except to subsequent purchasers after a loss. Third, the bill tried to amend the assignment statute (Section 627.422) by expressly authorizing a property insurance policy to prohibit the post-loss assignment of certain benefits or rights that apply to specified losses, and deeming void a non-compliant post-loss assignment. [63] This bill died in the Senate Judiciary Committee.

Several bills were filed during the 2016 legislative session. Senate Bill 596 would have added a new section to the Insurance Code, providing requirements under a property insurance policy for the post-loss assignment or transfer of rights, benefits, or policy provisions not related to liability coverage. For instance, an insured with a covered loss could not assign a claim until the insured gave notice of the loss to the insurer or their agent. The exception to this would be if repairs must be performed and paid to protect the property from further damage. Also, the bill restricted assignees from performing any services not specifically approved by the policyholder in a separate contract that spelled out the scope and cost of such repairs, and provided limitations on the assignee’s right to collect monies from, sue, or claim a lien on the property of the policyholder. The bill set forth detailed requirements, limitations and disclosure for a post-loss assignment to be valid. [64] This bill likewise died in the Senate Judiciary Committee.

House Bill 671 would have added a new section to a statutory chapter outside of the Insurance Code. This bill would have prohibited contractors or other parties from receiving a referral fee for doing work in which they would be compensated by an insurance policy. The bill also sought to curb such parties from interpreting or advising insureds on coverage or duties under the policy, or otherwise adjusting a claim on behalf of insureds. Insureds were to be given an itemized estimate of the cost of services and materials for repairs before the agreement authorizing repairs could be executed. [65] This bill died on the House Floor, on second reading, after being reported favorably out of its three committees of reference.

Senate Bill 1248, making it as far as the Senate’s Special Order Calendar, sought to expand the prohibition against a licensed contractor adjusting claims, unless the contractor were a licensed public adjuster, to include a person that performed emergency remediation or restoration services under an insurance policy and subcontractors to a licensed contractor.

The bill sought to create requirements for repair, mitigation, and restoration services; and to limit referral fees to $25. Similar to House Bill 671, the bill tried to require that persons providing emergency remediation or restoration services first provide the insured with a description of the scope of services and materials to be provided, before pressing the insured for an assignment. The insured would be notified that any assignment was limited to the scope of the work and that the insured may still have claims under the insurance policy.

A new statutory section would have been created, essentially prohibiting balance billing. The assignee could not attempt to collect money from, maintain an action at law against, or report a policyholder to a credit agency for payment for which the insurer was liable. An assignee could take action against a policyholder for payment of the amount of the deductible or upgrades ordered by the policyholder which were not covered under the policy.

Regulatory Effort

The case of Security First Ins. Co. v. Florida Office of Insurance Regulation [66] describes an insurer’s effort to gain the OIR’s approval to amend the assignment language in its homeowners policy forms. This amendment would have restricted the ability of policyholders to assign post-loss rights without the insurer’s consent. The OIR disapproved the form filing as contrary to Florida law. [67] A hearing officer upheld the OIR’s decision, reasoning that a “restriction on assignments of post-loss rights in an insurance policy would be misleading as it would lead the policyholder to believe that the validity of such assignment was contingent upon the written consent of the insurer, contrary Florida law.” [68] The OIR filed a final order adopting the hearing officer’s findings and conclusions. The First District Court of Appeal affirmed the OIR’s order based on “an unbroken string of Florida cases over the past century [starting with Teutonia ] holding the policyholders have the right to assign such claims without insurer consent.” [69]

On February 9, 2016, Citizens made a form filing with the OIR to address these issues but not by way of amending an assignment provision. The OIR approved this filing for both new and renewal business. The amendments seek to ensure that Citizens has the opportunity to confirm coverage and inspect damage, without affecting benefits under the policy.

Policyholders must take Reasonable Emergency Measures (previously Reasonable Repairs ) solely for the purpose of protecting their property from further damage. To encourage prompt notice of losses and prevent abuse, Reasonable Emergency Measures may not exceed the greater of $3,000 or 1% of the Coverage A (the physical structure of the home) limit, unless the policyholder first receives approval from Citizens.

To prevent permanent repairs from being made before Citizens can inspect the property, except for Reasonable Emergency Measures , there is no coverage for permanent repairs that begin before the earlier of: (a) 72 hours after Citizens is notified of the loss, (b) the time of loss inspection by Citizens, or (c) the time of other approval by Citizens. Reasonable Emergency Measures may include permanent repair when necessary to protect the covered property from further damage or to prevent unwanted entry to the property. To the degree reasonably possible, the damaged property must be retained for Citizens to inspect. Citizens has no duty to provide coverage if the insured fails to comply with his duties after a loss prejudicial to Citizens.

Collapse coverage now states more explicitly that coverage for collapse of the building does not include coverage for collapse of plumbing that results only from age, deterioration or maintenance. Language in the policy, stating that Collapse is not a Peril Insured Against , now includes additional detail to better describe Collapse . Policy language as to Accidental Discharge of Water or Steam now states that coverage will be provided for necessary access to repair only the portion or part of the plumbing system that caused a covered loss. Citizens also revised the seepage language of its policy form. [70]

After the OIR’s approval of these revisions, eleven property insurers immediately made similar filings with the OIR to amend their forms along the lines of the Citizens filing. [71] The OIR has encouraged other insurers in the state to review the Citizens filing and submit their own changes. [72] Further, on April 12, 2016, the OIR published notice of rule development as to the possible amendment of the OIR’s Rule 69B-220.051, Florida Administrative Code, regarding the Conduct of Public Adjusters. The OIR’s proposed rule amendment would establish a presumption that the statutory requirement that a public adjuster provide “prompt notice” of a claim to an insurer is satisfied if notice to the insurer is given within five business days after the date on which the contract for adjusting services with the insured was executed. The OIR indicated that, “Requiring public adjusters to notify insurers of claims within a specified time period will assist insurers in the assessment and timely settlement of such claims.” [73]

All Florida policyholders should be concerned about the skyrocketing number and severity of claims filed on their behalf by service providers and their counsel. AOBs provide these parties with the means to extract compensation for unverified damages. Florida’s one-way fee statute encourages these third parties and their lawyers to sue insurers regardless of the veracity of the scope and amount of the claim.

Florida’s courts have routinely upheld post-loss assignments, deferring to the right of the insured to transfer his proprietary interests in claims on his home. However, the ramifications of AOBs are often not disclosed to the insured. Further, the AOB will not relieve the insured of his duties under the policy with respect to the claim. His duties do not follow the rights which he transfers to a third party service provider. As such, some commensurate right in the claim must be preserved for the insured.

The increased cost of responding to these claims is driving up, and will continue to drive up, premium rates. This trend, if these non-weather-related costs remain unabated, will make homeowners insurance unaffordable or unavailable for many consumers. This activity will undo much of the effort of Citizens, as the state’s insurer of last resort, to move insureds into the state’s revitalized voluntary market. Further, this activity will adversely impact the increased appetite of the reinsurance market for Florida risk.

If not the courts, the legislature must address these issues as a matter of public policy. In the meantime, insurers must act to protect their financial ability to pay all valid claims, before the occurrence of a catastrophic weather-related event. The inappropriate use of AOBs has now become an “unbargained-for risk” for homeowner insurers and the unaware insurance consuming public of this state.

* The author would like to thank John David (JD) Dickenson, his partner at Cozen O’Connor’s West Palm Beach office, for JD’s helpful insight, feedback and suggestions as to the issues discussed in this Article.

In this issue...

Colorado seeks another first - universal health care.

Posted on 3/1/2016

FLORIDA LEGISLATIVE SESSION - INSURANCE REPORT

Eu-us covered agreement on reinsurance collateral: possible impact on surplus lines, oklahoma workers' compensation law provisions ruled unconstitutional, key legislative bills passed by georgia assembly in 2016 legislative session.

[1] Special Report: Execs Warn of Impending Florida Market Crisis Over Water Loss Claims , Ins. J., May 3, 2016, available at http://www.insurancejournal.com/news/southeast/2016/05/03/407257.htm (statement of Citizens CEO B. Gilway & CRO J. Rollins) [hereinafter Special Report ].

[2] Special Report , supra note 1.

[3] Id . (statement of Citizens CEO B. Gilway).

[4] Florida Justice Reform Institute, Restoring Balance in Insurance Litigation 27 (2016) (citing Citizens Property Insurance Corporation, Presentation on Assignment of Benefits 2 (Feb. 9, 2015)).

[5] Id . at 13.

[6] Cont’l Cas. Co. v. Ryan Inc. E. , 974 So. 2d 368, 376 (Fla. 2008) (citations and internal quotation marks omitted).

[7] Kohl v. Blue Cross & Blue Shield of Fla., Inc ., 988 So. 2d 654, 658 (Fla. 4th DCA 2008) (emphasis added).

[8] Ryan Inc. , 974 So. 2d at 376 (citations and internal quotation marks omitted).

[9] Kohl , 955 So. 2d at 1143 (emphasis added).

[10] Fla. Stat. § 627.422 (emphasis added).

[11] 342 So. 2d 1051 (Fla. 3d DCA 1977).

[12] Id . at 1052 (citations omitted).

[13] Lexington Ins. Co. v. Simkins Indus. , Inc ., 704 So. 2d 1384, 1386 (Fla. 1998).

[14] E.g ., Better Constr., Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh , 651 So. 2d 141, 142 (Fla. 3d DCA 1995) (citing Teutonia , infra note 17, Gisela, infra note 20 , and Fla. Stat. § 627.422). Due to space limitations, this article will not address no-action clauses, access to court issues, and other potentially applicable theories.

[15] Bioscience W., Inc. v. Gulfstream Prop. & Cas. Ins. Co. , 185 So. 3d 638, 641 (Fla. 2d DCA 2016) (citing Peck v. Pub. Serv. Mut. Ins. Co ., 114 F. Supp. 2d 51, 56 (D. Conn. 2000) (“An assignment before a loss involves a transfer of a contractual relationship, whereas an assignment after a loss is the transfer of a right to money claim.” (citing 3 Lee R. Russ & Thomas F. Segalla, Couch on Insurance § 35.7 (3d ed. 1999)).

[16] West Florida Grocery Co. v. Teutonia Fire Ins. Co. , 77 So. 209, 210-11 (Fla. 1917) (emphasis added).

[17] Id . at 211.

[18] Simkins Indus. , Inc ., 704 So. 2d at 1386 n. 3.

[19] Ryan Inc. , 974 So. 2d at 377 n. 7 (Fla. 2000) (quoting Teutonia to indicate that it is a “well-settled rule that [anti-assignment provisions do] not apply to an assignment after loss.”); Better Constr., Inc. , 651 So. 2d at 142 (Fla. 3d DCA 1995) (“a provision against assignment of an insurance policy does not bar an insured’s assignment of an after-loss claim”); Gisela Investments, N.V. v. Liberty Mut. Ins. Co. , 452 So. 2d 1056, 1057 (Fla. 3d DCA 1984) (citing Teutonia to hold that, “A provision in a policy of insurance which prohibits assignment thereof except with consent of the insurer does not apply to prevent assignment of the claim or interest in the insurance money then due, after loss”).

[20] Accord One Call Prop. Servs., Inc. v. Security First Ins. Co. , 165 So. 3d 749, 754 (Fla. 4th DCA 2015) (rejecting arguments that the insured had nothing to assign at the time the assignment was executed because benefits were not yet due under the policy, concluding that “an assignable right to benefits accrues on the date of the loss, even though payment is not yet due under the loss payment clause.”).

[21] Cf . Highlands Ins. Co. v. Kravecas , 719 So. 2d 320, 321-22 (Fla. 3d DCA 1998) (holding that, where insured assigned his claim to subsequent homeowner, the insurer’s obligation was limited to insured’s structural damage claim where insured made no claim under loss of use coverage of policy for additional living expenses benefits).

[22] Black’s Law Dictionary (9th ed. 2013).

[23] Spears v. W. Coast Builders’ Supply Co ., 133 So. 97, 98 (Fla. 1931).

[24] Kohl , 955 So. 2d at 1143.

[25] Classic Concepts, Inc. v. Poland , 570 So. 2d 311, 313 (Fla. 4th DCA 1990) (emphasis added), quoted in Kohl , 955 So. 2d at 1143.

[26] 955 So. 2d 1140 (Fla. 4th DCA 2007).

[27] Kohl , 955 So. 2d at 1142 (emphasis in policy provision); see also Kohl , 955 So.2d at 1144 (“No Florida case or statute requires a specific verbal formula for a ban on assignments to be effective.”).

[28] Id . at 1144 (citations to cases in other states omitted).

[29] Id. at 1144-1145 (citations and internal quotations omitted, emphasis added).

[30] Id. at 1145 (citations and internal quotations omitted, emphasis added). It is noteworthy that the court referred to Section 627.638(2) as authorizing prohibitions on the assignment of both health insurance contracts and health insurance benefits . Id . at 1143. Under that statute, “If an insured makes an assignment of benefits to a recognized hospital, licensed ambulance provider, physician, or dentist, the insurer must make payment to the provider “unless the insurance contract provides otherwise.” Fla. Stat. § 627.638(2) (2005). Thus, if an AOB (direct payment) to the provider were not permitted, the insurer would pay benefits to the policyholder from whom the provider must seek payment for services. However, the court declined to base its holding upon this statute, and Dr. Kohl failed to make the insured a party to the case.

In 2009, a bill was passed and signed into law which amended Section 627.638(2) to require the direct payment of plan benefits to any person who provides services in accordance with the provisions of the insurance policy whenever the insured specifically authorizes payment to that provider through an AOB. The law now prevents insurance contract provisions that would “provide otherwise.” 2009 Fla. Laws ch. 124. The intent of this statutory revision was to allow the insured to assign benefits, rather than paying the provider first and then seeking reimbursement from the insurer. Out-of-network providers would benefit by being entitled to direct payment of benefits from insurers, even if the providers did not participate in the insurer’s provider network, assuming that the policyholder executes an AOB. However, the bill allowed out-of-network providers the option to balance bill the insured for the difference between the amount paid by the insurer and the amount charged by the out-of-network provider. Staff of Senate Comm. on Gen. Gov’t Appropriations, Bill Analysis and Fiscal Impact Statement, CS/SB 1122, at 3 (Apr. 20, 2009).

[31] See Fla. Const. ch. X, § 4(a)(1) (“There shall be exempt from forced sale under process of any court, and no judgment, decree or execution shall be a lien on ... the following property owned by a natural person: ... a homestead”).

[32] Teutonia , 77 So. at 211.

[33] One Call Prop. Servs., Inc. v. St. Johns Ins. Co ., No. 13-000868-CA, 2014 WL 7496474, at 1¶¶ 3 & 4 (Fla. 19th Cir. Ct. Nov. 20, 2014) (“This is particularly true where, as here, the contract was not executed by [one of the two spousal property owners]”), aff’d per curiam , No. 4D14-4585, slip. op. at 2 (Fla. 4th DCA Jan. 28, 2016).

[34] Id. (ruling that One Call’s violation of the prohibition against unlicensed public adjusting invalidated and voided the AOB as a matter of law). Cf . Fla. Stat. § 626.854(16) (public adjuster statute, permitting a contractor to “discuss or explain a bid for construction or repair of covered property with the residential property owner who has suffered loss or damage covered by a property insurance policy” if that contractor “is doing so for the usual and customary fees applicable to the work to be performed as stated in the contract between the contractor and the insured.”).

[35] See Fla. Stat. § 627.405(1) (“No contract of insurance of property or of any interest in property or arising from property shall be enforceable as to the insurance except for the benefit of persons having an insurable interest in the things insured as at the time of the loss”). But see Accident Cleaners, Inc. v. Universal Ins. Co ., 186 So. 3d 1, 2 (Fla. 5th DCA 2015) (holding that a post-loss assignee is not required to have an insurable interest at the time of loss).

[36] See Emergency Servs. 24, Inc. v. United Prop. & Cas. Ins. Co. , No. 2011 CA 007170 MB, 2014 WL 1153424, at *1-2 (Fla. 15th Cir Ct. Jan. 17, 2014) (concluding that where the insureds, assigning only their rights and benefits relative to the services the company performed, never reached an agreement with their insurer as to the amounts due for service performed, “These cases, however, do not support the assignment of a cause of action to determine the amount due under the policy when the policy contains an anti-assignment clause such as the one in this case.”).

[37] See One Call Prop. Servs. Inc. , 165 So. 3d at 755.

[38] Fla. Patient’s Comp. Fund v. Rowe , 472 So. 2d 1145, 1148 (Fla. 1985); see also State Farm Fire & Cas. Co. v. Palma , 629 So. 2d 830, 832 (Fla. 1993) (“This Court has followed the ‘American Rule’ that attorney’s fees may be awarded by a court only when authorized by statute or by agreement of the parties.”).

[39] Fla. Stat. § 627.428(1) (emphasis added).

[40] Rowe , 472 So. 2d at 1148.

[41] Danis Indus. Corp. v. Ground Improvement Techniques, Inc ., 645 So. 2d 420, 421 (Fla. 1994).

[42] Roberts v. Carter , 350 So. 2d 78, 79 (Fla. 1977) (emphasis added, footnotes omitted), holding reaffirmed in Ryan Inc. , 974 So. 2d at 377.

[43] Wollard v. Lloyd’s & Cos. of Lloyd’s , 439 So. 2d 217, 218 (Fla. 1983). Cf. Travelers Indem. Ins. Co. of Ill. v. Meadows MRI, LLP , 900 So. 2d 676, 679 (Fla. 4th DCA 2005) (holding that insured was entitled to attorney’s fees associated with an expensive and drawn out appraisal due to a disputed value estimation).

[44] Pepper’s Steel & Alloys, Inc. v. United States , 850 So. 2d 462, 465 (Fla. 2003).

[45] Id. at 466.

[46] See , e.g ., Allstate Insurance Co. v. Regar , 942 So. 2d 969 (Fla. 2d DCA 2006).

[47] 261 So. 2d 131 (Fla. 1972) [hereinafter All Ways ].

[48] Id. at 131-32.

[49] Ryan Inc. , 974 So. 2d at 378.

[50] Nationwide Mut. Fire Ins. Co. v. Pinnacle Medical, Inc ., 753 So. 2d 55, 59 (Fla. 2000), citing State Farm Fire & Cas. Co. v. Palma , 629 So. 2d 830, 833 (Fla. 1993); Bell v. U.S.B. Acquisition Co ., 734 So. 2d 403, 411 n. 10 (Fla. 1999); Meadows MRI, LLP , 900 So. at 679.

[51] Ivey v. Allstate Ins. Co. , 774 So. 2d 679, 684 (Fla. 2000).

[52] One Call Prop. Servs., Inc. , 165 So. 3d at 755.

[53] Florida Office of Insurance Regulation, Report on Review of the 2015 Assignment of Benefits Data Call 11 (Feb. 8, 2016).

[54] Id .

[55] Id . at 16.

[56] Id . at 15.

[57] Id . at 13.

[58] Citizens Property Insurance Corporation, Non-Catastrophic Homeowners Water Claims 4 (Jan. 2016).

[59] Id . at 9.

[60] See Florida Justice Reform Institute, Restoring Balance in Insurance Litigation 9-10 (2015).

[61] 177 So. 3d 627 (Fla. 1st DCA 2015).

[62] Id .

[63] CS/SB 1064, §§ 1, 3 & 4 (Fla. 2015).

[64] CS/SB 596, §§ 1 & 2 (Fla. 2016).

[65] CS/CS/HB 671, § 1 (Fla. 2016).

[66] 177 So. 3d 627 (Fla. 1st DCA 2015).

[67] Id. at 627.

[68] Id . at 628.

[69] Id .

[70] Florida Office of Insurance Regulation, Filing No. 16-02737, Citizens Property Insurance Corp. (filed Feb. 9, 2016, app’d Mar. 22, 2016).

[71] Ron Hurtibise, Private Insurers Piggybacking Citizens’ New Claims Restrictions , Sun-Sentinel, Apr. 14, 2016, available at http://www.sun-sentinel.com/business/consumer/fl-insurers-line-up-to-copy-citizens-restrictions-20160414-story.html.

[72] Special Report , supra note 1.

[73] 42 Fla. Admin. Weekly, No. 71, at 1630 (Apr. 12, 2016).

Received a document?

Florida Assignment of Benefits: Big Changes Coming in July of 2019

Matt Viator

428 articles

Florida Legal alerts

The sky isn’t falling, but there are a lot of changes coming that Florida contractors should be aware of. The new Florida assignment of benefit (“AOB”) regulations will affect contracts entered into after July 1, 2019, and it’s important to prepare for the changes.

Table of Contents

Florida assignment of benefits regulations overhauled

The Florida assignment of benefits rules dramatically changed last month with when H.B 7065 passed through Florida legislature and was signed by Governor Ron DeSantis. The goal was to fight off AOB abuse and to stifle unnecessary litigation, but it will create significant changes for construction businesses.

These rule changes mark a dramatic shift, at least for those contractors who perform post-storm recovery work . Any time an assignment of benefits is involved, there will be a few things to keep in mind.

Let’s look at some of the most impactful changes. For simplicity, a policyholder assigning their rights will be called an “owner,” and a party receiving the assignment of benefits will be referred to as a “contractor.”

For some insurance policies, benefits can’t be assigned

In some instances, insurers can prohibit an assignment of benefits altogether. Insurance companies can make policies available that completely restrict the ability to assign benefits (“restricted” policies), in whole or in part. However, to offer a restricted policy, the insurer must also provide the opportunity to purchase an unrestricted policy. However, restricted policies have to be cheaper than unrestricted ones – so expect quite a few restricted policies to block an assignment of benefits altogether.

New requirements for assignment of benefits contracts

For those “unrestricted” policies where an assignment of benefits will still be available. There’s a lot going on here, so let’s break this down into three topics: (1) form of the contract , (2) work that can be included, and (3) contract cancellation.

Specific form requirements for the contract

First, every assignment of benefits contract must be in writing . Plus, it must include an itemized, per-unit breakdown of the materials and services that are to be provided under the agreement. No lump sums . This way, an owner (and the insurance company) will be able to track specific costs related to the project.

Work that can be included in the contract

Further, any work that does not directly relate to the repair of the property can’t be included in a contract, where work will be done pursuant to an assignment of benefits. Only work performed to protect, repair, restore, replace, or to mitigate further damage may be included.

On the flip side, there are specific things that can’t be included. Penalties for properly rescinding or canceling the contract (more on that below) can’t be included, check or mortgage processing fees cannot be present, and neither can administrative fees.

Contracts can be rescinded too

The new contract requirements go beyond just the document itself. An owner can rescind the contract within 14 days of executing the agreement (regardless of whether any work has been performed), and up to 30 days after the agreement is signed if substantial work has not been done.

Further, the agreement may also be rescinded up to 30 days after work was scheduled to begin if substantial work hasn’t been performed yet. That means contractors can’t sign an agreement and put off commencing work. If they do, the contract could be canceled.

The contract must contain a notice provision

All assignment of benefits contracts must include this notice provision in 18-point(!), uppercase, bold font:

“YOU ARE AGREEING TO GIVE UP CERTAIN RIGHTS YOU HAVE UNDER YOUR INSURANCE POLICY TO A THIRD PARTY, WHICH MAY RESULT IN LITIGATION AGAINST YOUR INSURER. PLEASE READ AND UNDERSTAND THIS DOCUMENT BEFORE SIGNING IT. YOU HAVE THE RIGHT TO CANCEL THIS AGREEMENT WITHOUT PENALTY WITHIN 14 DAYS AFTER THE DATE THIS AGREEMENT IS EXECUTED, AT LEAST 30 DAYS AFTER THE DATE WORK ON THE PROPERTY IS SCHEDULED TO COMMENCE IF THE ASSIGNEE HAS NOT SUBSTANTIALLY PERFORMED, OR AT LEAST 30 DAYS AFTER THE EXECUTION OF THE AGREEMENT IF THE AGREEMENT DOES NOT CONTAIN A COMMENCEMENT DATE AND THE ASSIGNEE HAS NOT BEGUN SUBSTANTIAL WORK ON THE PROPERTY. HOWEVER, YOU ARE OBLIGATED FOR PAYMENT OF ANY CONTRACTED WORK PERFORMED BEFORE THE AGREEMENT IS RESCINDED. THIS AGREEMENT DOES NOT CHANGE YOUR OBLIGATION TO PERFORM THE DUTIES REQUIRED UNDER YOUR PROPERTY INSURANCE POLICY.”

Seriously. That’s a lot .

Working with the insurer

The Florida assignment of benefits regulations overhaul features a few areas where a contractor must cooperate with the insurer.

Contractors must give notice to the insurer when benefits are assigned

Every agreement for the assignment of benefits in Florida must contain a provision requiring the assignee (contractor) to notify the insurer of the agreement. This notice must be given to the insurer within 3 business days after the agreement was signed, or after work begins – whichever date is earlier. Practically, since work usually doesn’t begin until a contract is signed, this will typically run from the date of the agreement.

A copy of the executed contract must be included with the notice, as well. What’s more, any time there are changes to the contract or to the work that’s being performed, the contractor will need to keep the insurer apprised of the changes.

Keeping records and making them available to the insurer

A contractor must keep detailed records of all services provided under the contract, and they must make those records available to the insurer, if necessary. Further, contractors are required to cooperate with the insurer during the investigation of a claim or other issue. If the insurer requests certain documentation or records relating to the project, the contractor must provide them.

Notice must be given to the insurer before the contractor can file suit

At least 10 days before a contractor can file a lawsuit against the insurer to recover payment, the contractor must send written notice to the insurer. Think of it as a “Notice of Intent to File a Lawsuit.” This isn’t just a vague requirement either – there are very specific content requirements.

The notice must include:

Specific damages in dispute;
The amount claimed;
An updated, detailed, itemized written invoice or estimate of services;
The number of labor hours;
Proof that the work performed was done up to industry standards ; &
A settlement demand.

I’ll go into more detail below, but it’s crucial for a contractor’s notice to contain all required information, and for the settlement demand to be fair and accurate. Otherwise, they may get stuck paying the insurer’s legal fees.

Lawsuits in construction:

Payment Loss Litigation in Construction

The insurer must respond to the demand within 10 days of receipt

Within 10 days, the insurer must provide a written response to the contractor’s notice that they will be filing suit. Practically, it behooves an insurer to respond more quickly than 10 days since the contractor can file suit 10 days after the notice is sent.

Within 10 days after receipt of the notice of intent to file suit, the insurer must respond with either: (1) a settlement offer, or (2) require the contractor to participate in an appraisal or alternative dispute resolution procedures.

An insurer must also have a procedure put in place for the quick review, investigation, and evaluation of claims received. Just like a contractor, the statute strongly encourages insurers to give fair settlement offers. Otherwise, they might be left paying the contractor’s legal fees.

Who pays for the legal fees?

This part may take a bit of algebra, and it shows why it’s important to make any settlement demand as fair and accurate as possible. But, basically:

(1) If a contractor’s settlement demand is too high, and if that contractor receives a judgment that is far below their settlement offer, the contractor may have to pay the insurer’s legal fees.
(2) If both the settlement demand and settlement offer are reasonably in line with the judgment, each party pays its own legal fees.
(3) If the settlement offer from the insurer is too low, and the contractor receives a judgment far above the insurer’s settlement offer, then the insurer may have to pay the contractor’s legal fees.

The actual calculations, copy and pasted from the legislation:

(a) If the difference between the judgment obtained by the assignee and the pre-suit settlement offer is:

1. Less than 25 percent of the disputed amount, the insurer is entitled to an award of reasonable attorney fees.
2. At least 25 percent but less than 50 percent of the disputed amount, no party is entitled to an award of attorney fees.
3. At least 50 percent of the disputed amount, the assignee is entitled to an award of reasonable attorney fees.

When benefits are assigned, contractors can’t pursue payment from the owner

Here’s a caveat that will be tough on contractors who do execute an assignment of benefits, as well as their subs and suppliers: If a payment dispute arises with an insurer during a project where an assignment of benefits is present, the contractor or their subs can’t attempt to recover payment from the owner. An owner will be responsible for payment up to their deductible and work they’ve “approved”, but after that, contractors, subs, and suppliers on these jobs can only pursue payment recover between themselves and against the insurer.

This has vast practical implications for parties who regularly work under an assignment of benefits agreement.

For any amounts beyond the owner’s deductible – based on how this new legislation is laid out – contractors, subs, and suppliers couldn’t demand payment from the owner, they couldn’t file mechanics liens for recovery, couldn’t file suit against the owner, and they couldn’t send an owner’s debt to collections.

But the way this part of the statute is written isn’t exactly clear. It states that the owner will be responsible for “ Any betterment ordered and performed that is approved 209 by the named insured. ” However, this comes almost immediately after the statute purports to waive recovery rights for work done under the assignment agreement.

However, if an owner requests and approves work outside the scope of the assignment of benefits contract, it seems clear that contractor, subs, and suppliers will be able to look to the owner for payment. But, as long as the work performed is done under the assignment of benefits agreement, recovery options are extremely limited.

Bottom line

These are some of the most substantial changes coming with the new Florida assignment of benefits regulations, but we couldn’t cover everything here. Further, some of these new laws are in conflict with existing law – and some of the provisions of this statute seem to even be in contradiction with themselves . That means it’s impossible to know exactly how it will all shake out.

Regardless, for Florida restoration contractors and other construction businesses who do insurance work, it’s a good idea to take a deep dive on the new laws. While this legislation was borne to benefit Floridians and fend off AOB litigation, the Florida construction industry must wait and see what the practical effects will be.

Florida Assignment of Benefits: Big Changes Coming in July of 2019

Ask an expert for free

I sent the pre-construction notice for Arkansas today 06/19/2023. Will I still be able to file a lien.

In the state of Missouri, what happens to a general contractor's mechanics lien rights if the property is quit claimed from the original owner to a new owner? Additionally, what happens to a general contractor's mechanics lien rights if the property undergoes a trustees sale/foreclosure to a new...

I never signed a contract with my contractor. All work has been hourly plus materials costs. He has only provided email invoices. Is he obligated to provide paper copies of the invoices?

View Profile

About the author

What is a notice of commencement your guide with form downloads.

Typically, the filing of a notice of commencement by the property owner or other top-of-chain party affects preliminary notice and...

Jun 20, 2019

What Is a Work in Progress Schedule? | Construction Accounting

The Work In Progress (WIP) schedule is an accounting schedule that's a component of a company's balance sheet. It's calculated...

Jun 14, 2017

What Is Underbilling? | Construction Industry Accounting

Underbilling occurs when a contractor does not bill for all the labor and materials delivered in a billing cycle. It...

Jun 8, 2017

Conditional vs. Unconditional Lien Waivers: The Difference & Why It Matters

Unconditional vs. conditional lien waivers: which type of lien waiver should you use on your construction projects and jobs? We...

Oct 19, 2018

IMAGES

Assignment Of Benefits Form
Assignment Of Benefits
PPT
Equitable Distribution Florida 401k
Fillable Online Assignment of Benefits
What is an Assignment of Benefits Agreement?

VIDEO

TPT251 Individual Assignment : Benefits of Supply Chain Management (SCM)
The work integrated assignment benefits
Advancing equitable heat resiliency planning in environment justice communities in Boston
Equitable interest: The Hidden Benefits
KDD 2023
3-Year Residency Requirement or 90 Credit Hours

COMMENTS

The Current State of Assignment of Benefits Litigation in Florida
By: Senior Counsel Nhan T. Lee with Associate Wayne A. Comstock. On May 25, 2022, Florida lawmakers approved property insurance reforms that remove attorney's fees, with respect to assignment of benefits ("AOB") property insurance litigation. [1] One-way attorney's fees are a longstanding problem in Florida, [2] and the reforms come at a time when AOB litigation increasingly affects ...
Impact of Florida's New Assignment of Benefits Law: HB 7065
Benefits Law: HB 7065. On April 26, 2019, Florida Governor Ron DeSantis signed into law Florida House Bill 7065. The law, which took effect on July 1, 2019, was designed to reduce the amount of assignment of benefits ("AOB") agreements that could be signed between entities and insureds. Governor DeSantis signed H.B. 7065 into law ...
Assignment of Benefits (AOB)
Assignment of Benefits (AOB) is an agreement that transfers the insurance claims rights or benefits of the policy to a third party. An AOB gives the third party authority to file a claim, make repair decisions, and collect insurance payments without the involvement of the homeowner. AOBs are commonly used in homeowners' insurance claims by ...
Client Update
Florida Appellate Court Issues Opinion on Validity of Assignment of Benefits in Property Insurance Claim. The 4 th DCA held that the mere fact a vendor performed the work on the home did not give rise to an equitable assignment, absent any evidence that the insured intended to assign his rights under the policy to the vendor. Brown v.
JD Supra: Florida's "Assignment of Benefits" Bill: A Guide Through the
The bill establishes several new sections of the Florida Statutes, including Fla. Stat. § 627.7152. § 627.7152(2)(a) sets requirements for a proper assignment of benefits: 627.7152 Assignment ...
PDF ASSIGNMENT OF BENEFITS
An assignment of benefits (AOB) is a legal contract that allows you, as the policyholder to transfer your insurance rights to a third-party (assignee), ... contact the Florida Department of Financial Services' toll-free Insurance Consumer Helpline at 1-877-MY-FL-CFO (693-5236).
Florida Insurance Ruling Sets Precedent on New Assignment-of-Benefits
The state legislature added Florida Statutes Sec. 627.7152, which covered assignment agreements and required contractors to follow new rules to prevent them from taking advantage of homeowners and ...
Florida Assignment of Benefit Abuse: Recent Developments
RECENT DEVELOPMENTS. The debate in Florida over a controversial practice known as Assignment of Benefits, otherwise known as "AOB," has ramped up in recent months as the discussion has made its way to the State's Legislature and Supreme Court. AOB—the practice of assigning one's right to receive benefits or make claims under an ...
PDF ADJUSTER REFERENCE GUIDE FLORIDA ASSIGNMENT OF BENEFITS (AOB ...
FLORIDA ASSIGNMENT OF BENEFITS (AOB) Fla. Stat. § 627.7152 | Effective: July 1, 2019 ... whole or in part, the assignment of benefits. Contain the following notice in 18-point uppercase and boldface type: YOU ARE AGREEING TO GIVE UP CERTAIN RIGHTS YOU HAVE UNDER YOUR INSURANCE POLICY TO A THIRD PARTY, WHICH MAY RESULT IN LITIGATION AGAINST ...
From Chaos to Clarity: Assignment of Benefits Reforms and Their Effects
The Assignment of Benefits (AOB) process has been both a solution and a source of problems for homeowners and insurers alike. This article delves into the recent reforms in Florida's AOB landscape, aiming to clarify its impact on policyholders, insurers, and contractors. Definition of Assignment of Benefits and How it Functions in Insurance ...
PDF District Court of Appeal of The State of Florida
Florida Statutes (2020), which requires an assignee of insured's PIP an benefits to attach to a complaint a copy of the assignment of benefits. Instead, section 627.736 requires that an assignee provide an insurer with a copy of the assignment filing an action for benefits. before More
A Critical Change to Florida'S Assignment of Benefits Law Fla. Stat
In July of 2019, Florida's new assignment of benefits law went into effect and is applicable to residential and commercial property insurance policies. [Fla.Stat. 627.7152(1)(b)] The new law has something for everyone: insurer, insured persons or entities (typically home and property owners) and benefits assignees (typically contractors or others providing services to protect, repair ...
Florida's "Assignment of Benefits" Bill: A Guide Through the New
The bill establishes several new sections of the Florida Statutes, including Fla. Stat. § 627.7152. § 627.7152(2)(a) sets requirements for a proper assignment of benefits: 627.7152 Assignment agreements.— (2)(a) An assignment agreement must: 1) Be in writing and executed by and between the assignor and the assignee.
PDF Final Order and Opinion Affirming Trial Court'S Judgment
This Court has jurisdiction pursuant to section 26.012(1), Florida Statutes, and Florida Rule of Appellate Procedure 9.030(c)(1)(A). in which she sustained personal injuries. At the time of the accident, Appellant's insurance. policy provided $10,000 in PIP benefits and $10,000 in medical payments benefits.
Equitable Assignment: Everything You Need to Know
Equitable assignments can be created by: The assignor informing the assignee that they transferred a right to them. The assignor instructing the other party to release their obligation from the assignee and place it instead on the assignor. The only part of an agreement that can be assigned is the benefit.
PDF ASSIGNMENT OF BENEFITS
You do not need to sign an assignment of beneﬁ ts form in order to get your insurance claim processed or your residence repaired, even for emergency repairs. READ FORMS CAREFULLY ASSIGNMENT OF BENEFITS If you are asked to sign an assignment of beneﬁ ts form, make sure you read it carefully and understand clearly what rights
An Update on Assignments of Benefits for Florida Contractors
As of the date of this post, under the December 16, 2022 revisions to 627.7152, Florida Statutes, contractors can use an assignment of benefits, and homeowners can enter into an assignment of benefits, if the insurance policy being assigned was issued on or after July 1, 2019 and before January 1, 2023. Based on this language, it appears that a ...
Florida's assignment of beneﬁts crisis
SPONSORED BY. It is a standard practice throughout the insurance world: As a convenience, a policyholder grants a third party - an auto glass repair company, a medical practitioner, a home contractor - permission to directly bill an insurer to settle a claim. That practice is called an assignment of benefits, usually known by the acronym, AOB.
Florida Court Strictly Enforces New Assignment of Benefits ...
Florida's Assignment of Benefits requirements. In 2019 Florida overhauled their assignment of benefits laws to curb growing concerns of AOB abuse within the state. "It is no secret that the State of Florida is currently in the midst an insurance crisis, which has resulted in numerous private insurance carriers to stop writing new homeowners ...
Florida Appellate Court Issues Opinion on Validity of Assignment of
As the Florida Legislature and Florida courts continue to grapple with the issue of assignments of benefits in property claims, the Fourth District Court of Appeal recently weighed in on a matter ...
Florida's Assignment of Benefits Law Updated to Better Protect Consumers
The legislation, CS/HB 7065, is the biggest change to Florida law on assignment of insurance benefits in years. Whenever Florida is struck by a hurricane or other natural disaster, contractors flock to the area, going door to door and offering to start immediate repairs on homes and businesses if the property owner will sign over their ...
Assignment of Homeowners Policy Benefits in Florida
In 1959, Florida codified the insured's lawful ability to assign a policy. Section 627.422, Florida Statutes, provides that, " A policy may be assignable, or not assignable, as provided by its terms.". [10] Thus, a provision in an insurance contract prohibiting assignment of the policy is enforceable under the plain language of Section ...
Florida Assignment of Benefits Regulations Were Just Overhauled
The Florida assignment of benefits rules dramatically changed last month with when H.B 7065 passed through Florida legislature and was signed by Governor Ron DeSantis. The goal was to fight off AOB abuse and to stifle unnecessary litigation, but it will create significant changes for construction businesses. These rule changes mark a dramatic ...
Physician Assistant (PA)
LocumJobsOnline Physician Assistant (PA) - Emergency Medicine In South Central Florida, FL - Excellent Benefits 2024-05-16 jobs in South Central Florida, FL. View job details, responsibilities & qualifications. Apply today!