After much debate, Governor DeSantis has signed into law new legislation that is being met with resistance by attorneys who handle homeowner’s claims. The new law, which went into effect on July 1, 2019, will have an immediate and important impact upon the use of Assignments of Benefits (AOB) under various homeowners’ insurance policies.
Proponents of the law, primarily insurance industry members and lobbyists, claim that this measure will curtail contractors and public adjusters from making up or inflating claims and taking advantage of laws that allow for the payment of attorney’s fees and costs to force insurance companies to settle claims that are not legitimate. These groups contend that abuse of the AOB has dramatically increased the amount of litigation surrounding homeowner’s policy claims. Lawyers representing the claimants and other concerned groups argue that the use of an AOB helps make sure claims are fully and properly paid and that the exponential growth of litigation is a result of insurers often underpaying, delaying or outright denying perfectly legitimate claims.
An Assignment of Benefits is a legal tool that allows property owners in need of repairs to sign over the benefits under their homeowners’ policy to contractors or others who make the repairs, allowing them to legally pursue payments from the homeowners’ insurance companies with all of the rights and entitlements that the homeowner would have. This would include the right to recover attorneys’ fees and costs if the claim were to prevail.
To understand this law, a few term definitions will help. The person giving an assignment of their rights is called the “Assignor” while the person getting the rights is called the “Assignee.” The new law does not prevent assignments from happening but instead sets forth certain specific requirements that must be met for the AOB to be enforceable. For instance, the assignee must provide the assignor with accurate and up-to-date revised estimates of the scope of work to be performed as supplemental or additional repairs are required. They also must perform the work in accordance with accepted industry standards and may not seek payment from the assignor exceeding the applicable deductible under the policy unless the assignor has chosen to have additional work performed at the assignor’s own expense.
Before filing suit under the policy, and, if required by the insurer, the assignee must submit to examinations under oath and recorded statements conducted by the insurer or the insurer’s representative that are reasonably necessary, based on the scope of the work and the complexity of the claim. The examinations and recorded statements must be limited to the matters related to the services provided, the cost of the services, and the assignment agreement. Additionally, if the insurance carrier requires it, the assignee must participate in an appraisal or other alternative dispute resolution methods in accordance with the terms of the policy.
The new law will also allow for insurers to issue policies that prohibit the assignment of post-loss benefits and change how attorneys’ fees and costs will be paid. Under the new law, entitlement to attorney’s fees will be dependent upon a judgment obtained when compared to the insurer’s presuit offer amount. This creates a fee-shifting scenario which clearly favors the insurer over the party claiming damages.
Governor DeSantis proclaimed in a statement concerning the law that, “This legislation will protect Florida consumers from predatory insurance practices.” While it may be fairly argued that these conditions are designed as a means of simplifying the claims procedures and an attempt to weed out those contractors that are claimed to be cheating the insurance industry and homeowners, it is clear that the law very heavily favors insurers and puts terrific burdens upon the homeowners bringing these claims.
Cutler Rader has been representing first party insurance claims since the firm’s inception. We are proud to represent homeowner’s whose legitimate claims for damages have been undervalued or denied by their insurers. For your free consultation, please contact our office today.