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

florida assignment of benefits 2022

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

florida assignment of benefits 2022

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.

“In for a Penny, in for a Pound” is No Longer the Case for Florida Lawyers

Enhancing privacy protections for substance use disorder patient records, columbus, ohio ordinance prohibits employers from inquiries into an applicant’s salary history, the ohio chemical dependency professionals board’s latest batch of rules: what providers should know, governor mike dewine and the ohio state university introduce the soar study on ohio mental illness.

Home

  • Our Approach
  • Special Services
  • Analytics & Outcomes
  • Client Education
  • News & Events
  • Practice Articles

Property Insurance Reform Laws Passed in Florida-Now What?

On December 16, 2022, Florida Governor DeSantis signed into law potentially historic insurance reform, commonly referred to as SB 2A. This comprehensive and sweeping legislation will require insurance companies to investigate claims more efficiently, while changing the landscape in which first-party property claims are litigated into the future. Unless otherwise stated expressly, the provisions in SB 2A take effect on December 16, 2022 (the date the act became law). The following provisions of the new and amended laws* will most significantly impact insurance companies and insurance litigation.

  • FS 624.1551 was amended to address the dilemma carriers faced paying an appraisal award after a Civil Remedy Notice of Insurer Violation (CRN) has expired. Under the amended statute, an insured will only be permitted to bring a bad faith action where the property insurer breached the insurance contract and a final judgment or decree has been rendered against the insurer. Further, the acceptance of an offer of judgment under s. 768.79 or the payment of an appraisal award does not constitute an adverse adjudication under this section.

ATTORNEY FEES

  • Florida Statute 626.9373, subsections (1) and (3) which apply to suits brought against surplus lines carriers, are amended to eliminate any rights to attorneys fees for suits arising under a residential or commercial property insurance policy; 
  • Florida Statute 627.428(4) is amended to provide there is no right to attorneys’ fees in lawsuits which arise under a residential or commercial property insurance policy under this section. IT SHOULD BE NOTED, attorneys’ fees may still be awarded under Florida Statutes 57.105 and 768.79; 
  • The attorneys’ fees provisions and calculations contained in Florida Statute 627.70152, just enacted in 2021, have all been deleted from the statute and are no longer applicable to first party property claims arising under residential or commercial property insurance policies. This amendment is consistent with the legislative intent of the second special session of 2022, the elimination of the “one way” attorneys’ fees in first-party property litigation in Florida.

MODIFICATION OF TIME PERIODS TO TAKE ACTION

  • Florida Statute 627.71031 is amended to shorten the time periods in which the insurance companies must take certain actions (effective March 1, 2023):

(1)(a) Upon an insurer’s receiving a communication with respect to a claim, the insurer shall, within 7 (previously 14) calendar days, review and acknowledge receipt of such communication;

(3)(a) Unless otherwise provided by the policy of insurance or by law, within 7 days (previously 14) after an insurer receives proof-of-loss statements, the insurer shall begin such investigation as is reasonably necessary;

(3)(b) If such investigation involves a physical inspection of the property, the licensed adjuster assigned by the insurer must conduct any such physical inspection within 30 days after its receipt of the proof-of-loss statements;

(3)(e) The insurer must send the policyholder a copy of any detailed estimate of the amount of the loss within 7 days after the estimate is generated by an insurer’s adjuster;

(7)(a) Within 60 days after an insurer receives notice of an initial, reopened, or supplemental property insurance claim from a policyholder, the insurer shall pay or deny such claim or a portion of the claim unless the failure to pay is caused by factors beyond the control of the insurer.

  • Florida Statute 626.9541(1)(i)4. is amended to shorten the time for surplus lines carriers to make payment from 90 to 60 days from the date the insurer receives notice of of residential property damage claim unless payment of the undisputed benefits is prevented by factors beyond the control of the insurer as defined in s. 627.70131(5).

TIME TO FILE CLAIM

  • Florida Statute 627.70132(2) is amended to shorten the time for an insured to report a new claim. Specifically, a claim or reopened claim, but not a supplemental claim, is barred unless notice of the claim was given to the insurer within one year (previously two years) after the date of loss. A supplemental claim is barred unless notice of the supplemental claim was given to the insurer within 18 months (previously three years) after the date of loss.

BINDING ARBITRATION

  • Another goal of the December 2022, special session was the creation of Florida Statute 627.70154, which permits insurance companies to issue property policies which contain mandatory binding arbitration endorsements to resolve disputes with policy holders. There are very specific requirements for the insurers that wish to incorporate mandatory binding arbitration into their policies, including reduced premiums; signed election forms; and the option to purchase a policy that does not include mandatory binding arbitration.

HOMEOWNER BILL OF RIGHTS

  • Effective March 1, 2023, pursuant to Florida Statute 627.7142, insurers will be required to amend the Homeowner Claims Bill of Rights to include the following:

YOU HAVE THE RIGHT TO:

3. Receive from your insurance company a copy of any detailed estimate of the amount of the loss within 7 days after the estimate is generated by the insurance company’s adjuster.

4. Within 60 (previously 90) days, subject to any dual interest noted in the policy, receive full settlement payment for your claim or payment of the undisputed portion of your claim, or your insurance company’s denial of your claim.

5. Receive payment of interest, as provided in s. 627.70131, Florida Statutes, from your insurance company, which begins accruing from the date your claim is filed if your insurance company does not pay full settlement of your initial, reopened, or supplemental claim or the undisputed portion of your claim or does not deny your claim within 60 (previously 90) days after your claim is filed.

OFFERS OF JUDGMENT

  • Florida Statute 768.79 (Offer of Judgment and Demand for Judgment) was amended to address recent appellate court decisions and subsection (6) was added to provide,

768.79(6) For a breach of contract action, a property insurer may make a joint offer of judgment or settlement that is conditioned on the mutual acceptance of all the joint offerees.

ASSIGNMENT OF BENEFITS

  • Finally, one of the most important aspects of the December 2022 special session was to once and for all address and eliminate “assignment of benefits” or “AOBs” in property damage claims. Accordingly, Florida Statute 627.7152, just enacted in 2019, was amended to eliminate AOBs in residential and property damage claims. Specifically,  

627.7152(2)(a)1. provides an assignment agreement must be executed under a residential property insurance policy or under a commercial property insurance policy, issued on or after July 1, 2019, and before January 1, 2023; and most importantly,  

627.7152(13) was added to state, except as provided in subsection (11)**, a policyholder may not assign, in whole or in part, any post-loss insurance benefit under any residential property insurance policy or under any commercial property insurance policy as that term is defined in s. 627.0625(1), issued on or after January 1, 2023. An attempt to assign post-loss property insurance benefits under such a policy is void, invalid, and unenforceable.

Readers are cautioned that the above information is intended to merely highlight the most significant portions of the amended and new property laws and is not intended to be comprehensive or complete. Recipients are encouraged to review the new and amended statutes in their entirety and contact us with specific questions about how they may apply to claims and policies.

*The amendments primarily apply only to residential and commercial property damage claims.

**(11) This section does not apply to:

(a)An assignment, transfer, or conveyance granted to a subsequent purchaser of the property with an insurable interest in the property following a loss;

(b)A power of attorney under chapter 709 that grants to a management company, family member, guardian, or similarly situated person of an insured the authority to act on behalf of an insured as it relates to a property insurance claim; or

(c)Liability coverage under a property insurance policy.

The material in this law alert has been prepared for our readers by Marshall Dennehey. It is solely intended to provide information on recent legal developments and is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We welcome the opportunity to provide such legal assistance as you require on this and other subjects. If you receive the alerts in error, please send a note to [email protected] ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2022 Marshall Dennehey. All Rights Reserved.

florida assignment of benefits 2022

Articles & Blogs

Florida insurance reform law sb-2d approved, chartwell law outlines sb-2d.

florida assignment of benefits 2022

Florida just adopted a major insurance reform package that will directly impact the property insurance industry in the state. On May 24, 2022, the Florida Senate voted 30-9 to approve SB-2D, and then on May 25, 2022, the House passed the bill with a vote of 95-14. Governor DeSantis signed the bill into law on May 26, 2022.

In announcing his signing of the bill, DeSantis called the reform package “the most significant reforms to Florida’s homeowners insurance market in a generation.” Below we provide a quick outline of some of the important components of this new legislation:

Attorneys’ fees are no longer recoverable under an AOB except pursuant to Florida Statute Section 57.105. This prohibition is not limited solely to “Assignees” under § 627.7152, but also extends to “anyone other than a named or omnibus insured or a named beneficiary.” As such, in addition to impacting vendors operating under an AOB, another significant aspect of this change is this prohibition appears to include post-loss purchasers of an insured property. The relevant sections are as follows:
  • Florida Statute Section 627.428 is amended to add the following language:

         (4) In a suit arising under a residential or commercial property insurance policy, the right to attorney fees under            this section may not be transferred to, assigned to, or acquired in any other manner by anyone other than a            named or omnibus insured or a named beneficiary. *Identical language has been adopted for surplus lines’            carriers under § 626.9373(3) ‍

  • The “AOB Statute” - Florida Statute Section 627.7152 - has been amended to eliminate attorney fee recovery under that section stating, “attorney fees and costs may be recovered by an assignee only under s. 57.105.” ‍

          See SB-2d at p. 44 of 54 striking the prior language, and 627.7152(10). ‍

Pursuant to the amended language of Florida Statute Section 626.9373, the calculation of attorneys’ fees for insureds’ lawsuits against a surplus lines insurer will be awarded pursuant to the requirements of § 627.70152.
The court may now award insurers their attorney’s fees for obtaining dismissal under § 627.70152 due to the insureds’ failure to comply with the Notice of Intent requirement. See Fla Stat. § 627.70152(8)(a)(3)(b). ‍
In awarding attorneys’ fees pursuant to § 627.70152(8)(a), a strong presumption is created that a lodestar fee is sufficient and reasonable. Such presumption may be rebutted only in a rare and exceptional circumstance with evidence that competent counsel could not be retained in a reasonable manner. This impacts the potential for attorney fee multipliers. See Fla Stat. § 627.70152(8)(a)(3)(c). ‍
The definition of an “Assignment Agreement” pursuant to § 627.7152 is amended to mean “any instrument by which post-loss benefits under a residential property insurance policy or commercial property insurance policy, as that term, is defined in s. 627.0625 (1), are assigned or transferred, or acquired in any manner, in whole or in part, to or from a person providing services, including, but not limited to, inspecting, protecting, repairing, restoring, or replacing the property or mitigating against further damage to the property.” This is significant in that the definition now includes “inspecting,” which will now require engineers and diagnostic vendors to comply with the strict requirements of the AOB statute.
Section 624.1551, Florida Statutes, is created regarding Civil remedy actions against property insurers and provides that a claimant must establish that the property insurer breached the insurance contract to prevail in a claim for extracontractual damages under s. 624.155(1)(b).
Florida Statute Section 627.7011(a) is amended to state that if a roof deductible under 627.701(10) is applied to the insured loss, the insurer may limit the payment for the roof to ACV of the loss until the insurer receives reasonable proof of payment by the policyholder of the roof deductible.
  • “Reasonable proof” of payment includes a canceled check, money order receipt, credit card statement, or copy of an executed installment plan contract or other financing arrangement that requires full payment of the deductible over time.
Any physical inspection of a non-hurricane claim must occur within 45 days after the insurer's receipt of the proof of loss statements. See Fla Stat. § 627.70131(b). (Effective January 1, 2023). ‍
Within seven days of assigning an adjuster to the claim, the insurer must inform the policyholder that he/she may request a copy of any detailed estimate of the amount of the loss generated by an insurer’s adjuster. (Effective January 1, 2023). ‍
  • After receiving such a request from the policyholder, the insurer must send any such detailed estimate to the policyholder within the latter of seven days after the insurer received the request or seven days after the detailed estimate of the amount of the loss is completed. See 627.70131(d)

If you have any questions regarding these legislative changes or any inquiries regarding property insurance coverage or litigation issues in Florida, please do not hesitate to contact Chartwell Law.

Sign up for email notifications

florida assignment of benefits 2022

  • Meet our Professionals
  • View our Practice Areas
  • Search Site

karen-asher-cohen

What We Have to Offer

Radey is an AV-rated firm consisting of lawyers who practice before state agencies and in all state and federal courts.

News & Updates

Assignment limitations begin with new year.

Assignment Limitations Begin with New Year

Published on: January 1st, 2023 | Insurance

The Florida legislature passed significant property insurance reforms in its December 2022 special session. Governor Ron DeSantis promptly signed these reforms into law, with many taking effect immediately upon the law’s effective date. However, a key change related to assignments of benefits (AOB) begins to have its real impact in the new year.

For many years, Florida law allowed policyholders to assign their rights to post-loss benefits to third parties. Starting about a decade ago, this longstanding right began to foster abuses as contractors would take assignments from policyholders, perform questionable or overpriced work, and directly bill insurers. The vendors benefitted from Florida’s one-way attorneys’ fee statute leading to increased litigation, losses and loss adjustment expenses.

The legislature began taking incremental steps in 2019 to address abuses in this area. Unfortunately, modest efforts at reining in costs associated with AOB’s did not work. The Florida legislature therefore took a more definitive step in the December 2022 special session. The new law specifies that with respect to any residential or commercial property insurance policy issued on or after January 1, 2023, assignment agreements are invalid and unenforceable. This will better enable insurers to communicate and adjust claims directly with policyholders (under new standards for timeliness of communications and claims payments, also set forth in the new law). Perhaps most importantly, it will curb situations when multiple vendors are claiming rights under insurance policies and initiating lawsuits arising from a single claim.

Key legislators have commented that it will take some time for the benefits of the new law to appear, and that is certain the case with the elimination of post-loss assignments. Nonetheless, the recent law change will benefit the Florida market in the long run by restoring the role of the policyholder in communications and in the loss adjusting process.

  • MyNewMarkets.com
  • Claims Journal
  • Insurance Journal TV
  • Academy of Insurance
  • Carrier Management

Insurance Journal - Property Casualty Industry News

Featured Stories

  • Liberty Mutual to Eliminate 250 Positions
  • Pennsylvania’s 7.8% Workers’ Comp Cut to Take Effect

Current Magazine

current magazine

  • Read Online

Florida CFO Calls for Ban on Assignments of Benefits, Limits on Public Adjusters

florida assignment of benefits 2022

In the wake of Hurricane Ian, Florida’s chief financial officer has taken a hard line on insurance claims litigation, calling for an outright ban on assignments-of-benefits agreements.

At a press conference in Cape Coral, a city hit hard by the hurricane this month, and in a statement Wednesday, CFO Jimmy Patronis also urged Florida lawmakers to establish a statewide insurance fraud prosecutor and to disincentivize public adjusters after a storm.

“We have bad public adjusters swarming impacted areas, soliciting, and trying to make a quick buck,” Patronis said. “Not only do individuals need more time to get out of a public adjuster contract during a state of emergency, we need to reduce the percentage a public adjuster is entitled to immediately following a storm, ensuring their motives are aligned with helping Floridians get back on their feet.”

florida assignment of benefits 2022

Patronis, whose Department of Financial Services regulates adjusters, did not say what he based the “bad adjusters” assertion on. But some Florida insurers have long complained about public adjusters working closely with contractors and promising homeowners free roofs after a windstorm, leading to exaggerated claims and litigation.

The CFO also did not provide details on his proposed schedule of fees for adjusters.

The call for an end to assignments of benefits, or AOBs, has already met with support from one insurance industry leader.

“We commend the CFO for calling attention to ongoing abuse of assignment-of-benefits tools by shady vendors whose goal is profit above all else,” said Michael Carlson, president of the Personal Insurance Federation of Florida, which represents a number of insurance carriers. “Eliminating post-loss assignments that transfer consumer rights to vendors is a good idea. We also believe that addressing exorbitant public adjuster fees is another good idea and a means to reduce predatory behavior by these licensees.”

Several Florida insurance executives in recent years have called for statutory changes that would allow insurance policies to bar AOB agreements, noting that thousands of lawsuits in recent years have resulted from disputed AOB claims. Data from CaseGlide, a litigation management software firm, shows that as much as 41% of litigated claims against Florida’s largest insurers resulted from assignees of benefits, usually from restoration contractors. In July, the AOB share of new litigations reached an 18-month high, the company said. That came despite 2019 Florida legislation that aimed to reduce AOB suits.

A number of other states allow insurance policies to include non-assignment of benefits clauses.

Carlson said that claims litigation is “the storm after the storm,” and that one-way attorney fees also need to be addressed to disincentivize unnecessary lawsuits.

The Florida Association of Public Adjusters pushed back on Patronis’ agenda.

“We are concerned that the recent release misrepresents the important role and work of licensed public adjusters,” FAPIA President Chris Cury said in a statement Thursday.

Instead of bad actors in the hurricane zone in southwest Florida, “it appears there is a focus on lawful and licensed insurance professionals who are truly working to help policyholders in their time of need.”

Cury noted that, following a declared emergency, adjuster fees already are limited to no more than 10% of any claim made in the first year after the loss.

“Licensed public adjusters, who are regulated by the Department of Financial Services, adhere to strict standards and continue to serve in an essential capacity for the sake of policyholders,” Cury said.

Insurance industry advocates have often blamed the adjusters for advertising heavily after storms and encouraging inflated claims. Insurance agents have reported that homeowners in the Hurricane Ian strike zone have fielded dozens of calls and door-knocks from public adjusters. But some adjusters and claimants’ attorneys have maintained that public adjusters help homeowners achieve a fair payout on claims, while insurance companies sometimes try to minimize the extent of damages.

florida assignment of benefits 2022

“The insurance company has adjusters trained to interpret policies and assess a loss but want to preclude an insured from retaining professionals to assist them in doing the same,” said West Palm Beach attorney Gina Clausen Lozier, who has represented policyholders in claims disputes.

She pointed out that many insurance policies require insureds to submit statements within a short timeframe attesting to the amount of losses. Failure to submit can result in denial of the claim. If it’s overstated, insurers have been known to allege fraud. A public adjuster can help provide a timely estimate.

Lozier agreed that Florida’s insurance market is facing a number of problems, but said that licensed adjusters are not to blame.

“The public adjusting industry in Florida is highly regulated, despite ongoing insinuations that public adjusters are operating without legal or ethical restraints by ‘preying’ on insureds,” she said.

Patronis did not call for another special session of the Florida Legislature to adopt his reform ideas, as some industry advocates have done, but referred to “this coming legislative session.” The 2023 regular session begins in March.

Patronis also reiterated his call for a $3 million anti-fraud and public education campaign.

“Policyholders need to understand what they are signing, and that litigation will only slow down their claims and could result in liens on their property,” Patronis said.

Top photo: Workers atop a building that was heavily damaged by Hurricane Ian at Fort Myers Beach. (AP Photo/Jay Reeves)

Topics Florida

Was this article valuable?

Thank you! Please tell us what we can do to improve this article.

Thank you! % of people found this article valuable. Please tell us what you liked about it.

Here are more articles you may enjoy.

florida assignment of benefits 2022

Written By William Rabb

Rabb is Southeast Editor for Insurance Journal. He is a long-time newspaper man in the Deep South; also covered workers' comp insurance issues for a trade publication for a few years.

Latest Posts:

  • Sotheby’s, Russians, Theft: Insurer Must Defend in High-End Miami Realty Suit
  • Castle Key Defends 53.5% Condo Rate Hike, Blames Reinsurance, Ian, Rapid Growth
  • Alfa Insurance Did Not Discriminate Against Worker with MS, Appeals Court Finds
  • South Carolina Lawmakers Mulling Liquor Liability Fund to Ease Coverage Crisis

The most important insurance news, in your inbox every business day.

Get the insurance industry's trusted newsletter

  • Categories: Southeast News Topics: assignment of benefits (AOB) , Florida's insurance crisis , Hurricane Ian
  • Have a hot lead? Email us at [email protected]

Insurance Jobs

  • Underwriting Operations Support – Carrier – REMOTE - Glendale, AZ
  • Commercial Lines Account Manager – Insurance – REMOTE - Sandy, UT
  • Commercial Lines Underwriting Assistant – REMOTE - Parkersburg, WV
  • Commercial Lines Underwriter – REMOTE - Brooklyn, NY
  • Potential Total Loss – CST/EST – Remote - Chicago, IL

MyNewMarkets

  • NCCI: Wage Growth Likely to Continue Workers Comp Payroll Growth
  • Do Regulators, Insureds and Agents Understand How Reciprocal Carriers and Some New MGAs Work?
  • A Deep Dive into the Diligent Effort (Search) Requirement
  • A Woman's Place Is in the Construction Insurance Space
  • An Apprenticeship

Claims Journal

  • 'Citizens 2.0' is 86'd but Other Florida Insurance, Liability Bills Still Alive
  • Sotheby's, Russians, Theft: Insurer Must Defend in High-End Miami Realty Suit
  • Risk Models Behind World's Best Hedge Fund Strategy Are Getting a Lot Harder to Crack
  • 3 Emerging Risks: AI-Driven Civil Unrest, Heavy EVs, Solar Panel Safety
  • AT&T Outage Triggered by Company Work on Network Expansion

Academy of Insurance education

  • February 29 Making Sense of It All: Reading Insurance Policies
  • March 7 Blockchain 101: How Smart Contract Impact The Insurance Professional
  • March 14 It's (Not) Just a Name Change and Other Issues. A Deep Dive into Extended Reporting Conditions
  • March 21 Excess and Surplus Lines - Doing Business Well in a Hard Market

Florida’s Property Insurance Reform: The Impact on Carriers and Insureds in the State of Florida

Rumberger | Kirk

The Florida Legislature passed Senate Bill 2-A (“SB2A” or the “Act”), which was signed into law on December 16, 2022.  The Act has the potential to significantly reduce litigation of first party property cases in the state of Florida.  This article summarizes key provisions of the Act that carriers should be aware of in order to protect their rights as well as ensure compliance with the Act. 

Summary of Key Provisions of the Act [1]

  • Bad Faith – Revises Florida’s Bad Faith Statute to eliminate the payment of an appraisal award or and the acceptance of an offer of judgment as a basis to file a bad faith action;  
  • Attorney Fees – The Act eliminates the right to attorney fees in residential and commercial suits;
  • Claims Handling Deadlines – The Act amends several deadlines related to an insurer’s claims handling requirements;
  • Notice of Claim – The Act shortens the time an insured has to file a claim and supplemental claim;
  • Mandatory Binding Arbitration – The Act permits carriers to include binding arbitration provisions within its policies;
  • Assignment Agreements – the Act eliminates Assignment of Benefits Contracts;

Key Provisions 

The Act eliminates an insured’s ability to file a bad faith action based solely on the payment of an appraisal award or the acceptance of an offer of judgment (by either party).  Prior to this amendment, the payment of an appraisal award acted as an adverse judgment entitling an insured to file a bad faith action.  Some background is important here.  The usual scenario played out like this: lawsuit and Civil Remedy Notice (“CRN”) are filed at the same time; carrier invokes appraisal and subsequently pays the award; Plaintiff files a motion for fees and costs; carrier attempts to settle the fee claim, but for an additional sum of money, is told it can obtain a release of all bad faith claims; carrier settles both the fee and bad faith claims for an increased amount.  Essentially, CRNs were (and arguably still are) being used as a type of extortion against carriers to procure a larger settlement, even where no legitimate basis for bad faith exists.  The legal fees and costs of litigating a bad faith action are astronomical in comparison to a breach of contract action.  There is much more discovery and many more issues.  Plaintiffs know this, and a cost-benefit analysis usually proves it is more cost effective to settle fifty post-appraisal bad faith claims, rather than litigate one. 

This scenario has played out in Florida for a long time.  In fact, the legislature attempted to address the issue back in 2019, when it amended the Bad Faith Statute to include a safe harbor period that prohibited the filing of a CRN for a period of 60 days where appraisal was invoked before a CRN was filed.  However, the statute did little to curb the abuse as most appraisals take longer than 60 days and most CRNs are filed before the carrier has had the chance to invoke appraisal.  The Act’s amendments are a welcomed change to the bad faith statute, and seek to reduce post-appraisal bad faith litigation.  It is a step in the right direction. 

It should be noted, however, that the difference between an insurer’s appraisal estimate and the final appraisal award can be used as evidence of bad faith, if a bad faith action is later filed on other grounds.  Further, if the carrier is found to have acted unfairly in its use of appraisal, the Act now allows the Office of Insurance Regulation (“OIR”) to revoke approval of the carrier’s appraisal forms, or prohibit the carrier from invoking appraisal for a period of time.

From a claims handling perspective, before claims enter litigation, it is important to evaluate whether appraisal is a viable option.  Appraisal benefits both insurers and insureds in ensuring prompt resolution of claims, while also avoiding the filing of a CRN for a period of 60 days.

Attorney Fees

The Act now eliminates the right to attorney fees in residential and commercial property insurance suits.  The Act took effect on December 16, 2022.  It is unclear whether the Act is intended to apply retroactively to bar entitlement to attorney fees in suits involving claims filed under policies that were issued before the Act took effect.  We expect the issue of retroactivity to be a hotly debated issue within the courts.  If the Act applies retroactively, there is no entitlement to attorney fees in any suit filed after December 16, 2022.  However, if the Act does not apply retroactively, the date of renewal of the policy must be after December 16, 2022 to bar entitlement to attorney fees and costs.  Lastly, although the Act eliminates the right to attorney fees, carriers will likely see an increase in litigation of current pending claims and/or claims not yet filed on policies that pre-date the Act.  

Claims Handling Deadlines

The Act amends several deadlines related to an insurer’s claims handling requirements under Fla. Stat. 627.70131.  This section goes into effect on March 1, 2023. Insurers should take important note of these changes:

  • Reduces the amount of time to acknowledge communication from its insured from 14 days to 7 days, unless there are factors beyond the insurer’s control. [2]
  • Reduces the amount of time to begin its investigation after receipt of a proof of loss from 14 days to 7 days, unless there are factors beyond the insurer’s control.
  • Reduces the amount of time to conduct a physical inspection after receipt of a proof of loss from 45 days to 30 days, if a physical inspection is required.
  • Requires an insurer to produce any estimate generated within 7 days after it is generated. The Act removes the insurer’s requirement to notify the insured of the right to request the estimates, since the insurer now must produce all estimates that are prepared.
  • Requires an insurer maintain detailed claim records of: (1) all claim communication, (2) any proof of loss received, (3) insurer’s requests for information; (4) any claim-related inspections; (5) any detailed estimates generated by the insurer; (6) beginning and end of any tolling periods; and (7) the insurer’s payment or denial of the claim.
  • Reduces the amount of time to pay or deny any initial, reopened, or supplemental claim from 90 days to 60 days, unless there are factors beyond the insurer’s control.

The requirements of this section may be tolled: (1) during mediation or other alternative dispute resolution proceeding under the policy; or (2) if the insured or their representative fails to provide requested claims information within 10 days after such request. Any request for information must be sent at least 15 days before the deadline to pay or deny the claim.

From a claims handling perspective, the Act requires insurer’s evaluate claims much faster with the ultimate goal of providing a prompt claim determination to its insured.  Insurers must quickly evaluate a claim and determine what information is needed from their insured to give it enough time to request information at least 15 days before the deadline to render a decision.  It is critical that the insurer have adequate procedures in place to comply with the new deadlines. 

Notice of Claim

The Act reduces the amount of time an insured has to file a claim or reopened claim from 2 years to 1 year.  It also reduces the amount of time an insured has to file a supplemental claim from 3 years after the loss to 18 months.  This is a welcomed change.  In Florida, there could be hundreds of weather events that occur over a period of years to an insured’s property.  Delayed reporting of a claim significantly reduces the ability of an insurer to adequately determine the cause and extent of the claimed damage.  It also has the effect of reducing the chances of payment on a claim due to the failure of the carrier to determine the cause and extent of damages.  The reduction in time to file a claim or supplemental claim should assist carriers and insureds in promptly adjusting claims, and having the potential to increase payment on claims, thus reducing litigation.     

Mandatory Binding Arbitration

The Act permits insurers to include mandatory binding arbitration provisions within their policies if: (1) they are contained in a separate endorsement; (2) the insurer provides a premium credit or discount; (3) the insured signs a form accepting the provision; (4) the endorsement establishes the insurer will comply with mediation prior to initiation of arbitration; and (5) the insurer offers a policy that does not require arbitration. 

Mandatory binding arbitration is a favorable tool to be used by both insurers and insureds to ensure prompt resolution of claims.  It provides a viable alternative to litigation, which often causes lengthy delays and increased costs, leaving the insured to wonder when their claim will be resolved.  Arbitration provisions will also provide immediate financial benefits to insureds looking to reduce premium costs, while preserving their right to have any dispute heard by a neutral party.  For insurers, it provides the benefit of reducing the exposure to litigation.  Insurers without mandatory appraisal provisions should evaluate whether mandatory binding arbitration provisions are a benefit it wishes to offer.

Assignment of Benefits

The Act eliminates Assignment of Benefits (“AOB”) contracts executed under a property insurance policy, effective January 1, 2023.  Any attempt by a policyholder to assign any post loss insurance benefit after January 1, 2023 is considered void, invalid, and unenforceable.  The Act puts the proverbial last nail in the coffin for AOB vendors in the state.  For context, according to the Insurance Information Institute, there were roughly 1,300 AOB lawsuits in Florida in the year 2000.  Three years later, the annual number increased to 79,000, and by 2018 there were roughly 135,000 AOB lawsuits through November – a staggering 70% increase in just 15 years. [3]   In many cases, insureds were largely unaware of the lawsuits being filed on their behalf.  Most insureds became aware of the lawsuits only after their carrier notified them that one had been filed.  AOB vendors were silently draining the coverage limits of insureds’ policies without ever notifying them of the cost of the work being performed or the repercussions of signing the AOB.  The Act puts a stop to AOB abuse in the state, and as a result, puts more money back into the hands of insureds and reduces abusive litigation in Florida.   

In summary, the Act takes positive steps to improve the insurance market in Florida for both insurers and insureds.  It has the potential to significantly reduce abusive litigation by eliminating AOBs and the one-way fee shifting provision.  The Act protects insureds’ rights by requiring insurers promptly and properly adjust claims, with the hopes of reducing disputes and potentially increasing payment of claims.  If a dispute does arise, the Act affords Florida’s insureds the right to resolve those disputes through use of alternative dispute resolution methods, rather than lengthy and costly litigation.  The Act has the ability to return Florida to a healthy insurance market, which ultimately means the potential for more options for insureds with reduced premiums.

[1] The Act includes several other provisions intentionally omitted from this article, as it falls outside the article’s intended scope. 

[2] Factors outside the insurer’s control are defined as: (1) a state of emergency issued by the Governor, a breach of security, or an information technology issue; and (2) actions by the insurer or insurer’s representative that constitute fraud, lack of cooperation, or intentional misrepresentation.

[3] https://www.insurancebusinessmag.com/us/news/breaking-news/aob-abuse-in-florida-rises-70-in-15-years-163448.aspx

Related Posts

  • Florida Passes Insurer Accountability Act: Stricter Compliance and Claims Handling Standards for Insurance Carriers
  • Breaking Down Bad Faith: Insurers’ Good Faith Duties and Defending Bad Faith Claims   Audio
  • Insurers Take Note: New Changes to Florida Law Mean Changes in Claims Handling & Roof Repairs in the Sunshine State   Audio
  • Automatic Liability: New Risk Under California’s Insurance Lapse Protection Statutes
  • Legal Update: Recent Changes to Florida Insurance Law and Its Effect on Litigation
  • McHugh, Thomas, and the Long-Term Risk of California Insurance Code Sections 10113.71 and 10113.72

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:

Rumberger | Kirk

Published In:

Rumberger | kirk on:.

Reporters on Deadline

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

Custom Email Digest

  • Insurance Journal
  • Insurance Journal TV
  • Academy of Insurance
  • MyNewMarkets.com
  • Carrier Management

Claims Journal - Insurance news and resources for claims adjusters

Featured Stories

  • AT&T Outage Triggered by Company Work on Network Expansion
  • AccuWeather: Potential ‘Super-Charged’ 2024 Hurricane Season
  • Fire Mitigation Industry: Gang Member's Extortion, Racketeering
  • Feds Announce Another $100M for Wildfire Risk Reduction Program

Fla. Contractors File Suit Challenging Assignment of Benefits Law

A group of contractors wasted little time in challenging the constitutionality of a law approved at the Florida Legislature’s special session last week, one the restoration companies argue singles them out and deprives them of attorney fees in assignment-of-benefits claims.

“The inability to recover prevailing party attorneys’ fees will effectively shut the courthouse door to plaintiffs because it will be cost-prohibitive to pay an attorney for these types of of small claims,” reads the complaint, filed in Leon County Circuit Court by Restoration Association of Florida and Air Quality Assessors.

Senate Bill 2D, passed largely along party lines, bars assignees of benefits from collecting attorney fees, even if they prevail in court. Insurers have long complained that the fees, coupled with Florida’s fee multiplier, is encouraging unnecessary claims litigation and is costing the industry huge sums every year.

The lawsuit argues that “deprivation of this right is significant because SB 2D wrongfully treats contractors, as assignees, disparately from homeowners and insurers.”

Some lawmakers and insurance industry advocates at the special session predicted the bill would be challenged by contractors, just as 2021’s Senate Bill 76 was challenged, then was temporarily suspended by a court. SB 76 sought to bar roofing contractors from soliciting homeowners and encouraging them to file insurance claims on roof damage. A federal judge has said the law may violate contractors’ constitutional rights to free speech.

florida assignment of benefits 2022

Restoration Association did not bring that challenge, but it is no stranger to Florida insurers. The association’s president is Richie Kidwell, who also owns Air Quality Assessors, a mold-remediation firm. He spoke forcefully against SB 2D at the May 23-25 special session. Kidwell and his group also recently filed suit against the Florida insurance commissioner and two carriers over their policy endorsements.

One endorsement, by American Integrity Insurance, offers premium discounts for policyholders who agree to binding arbitration in claims disputes. Another, by Heritage Property & Casualty Insurance, states that the insurer won’t pay contractors, but will only reimburse the insured for restoration work, effectively barring AOB claims.

That suit and the May 31 challenge to SB 2D were filed by Boca Raton attorney Joshua Alper and the Center for Constitutional Litigation.

A Florida law professor said neither suit stands much chance of succeeding.

“In a word, this lawsuit isn’t going anywhere,” Robert Jarvis, a professor at Nova Southeastern School of Law, said about the challenge to SB 2D.

He explained that it’s very difficult to win a lawsuit based on the Florida Constitution’s equal protection clause, Article I, Section 2. “That’s because the clause only protects plaintiffs who are ‘similarly situated’ to people or groups that aren’t impacted by the law the plaintiffs are challenging,” Jarvis said. “But there’s almost always some difference between the plaintiffs and non-plaintiffs.”

Jarvis said that in weighing the validity of an economics-regulation law, the courts use a “rational basis” test. The defendants, in this case the Florida Department of Business and Professional Regulation, need only show that some rational basis exists for distinguishing the targets of the law – the assignees of benefits.

“This is a very easy standard to meet—there’s almost always some rational basis that supports the law and the distinctions it draws,” said Jarvis, who studies and teaches constitutional law and contract law. “In passing laws, the Florida Legislature is not required to address every ill. Thus, singling out just AOB contractors is a perfectly legitimate exercise of the Legislature’s powers.”

The plaintiffs must also show that the law is clearly unconstitutional, but courts have generally found that, while they may disagree with a piece of legislation, they won’t usually nullify it.

“Judges often opine that there was a better solution that the Legislature could and should have selected, but they won’t strike down a law simply because it’s not the best solution,” Jarvis explained in an email. “They leave that to the Legislature (which can always see the error of its ways and enact a new law) and the people (who can always set things right by electing new legislators).”

Was this article valuable?

Thank you! Please tell us what we can do to improve this article.

Thank you! % of people found this article valuable. Please tell us what you liked about it.

Here are more articles you may enjoy.

florida assignment of benefits 2022

Want to stay up to date?

Get the latest insurance news sent straight to your inbox.

  • Categories: Southeast News Topics: assignment of benefits , attorney fees , fee multiplier , Florida legislatures , lawsuit , Restoration Association of Florida , Senate Bill 2D , special session
  • Have a news tip? Email us at [email protected]

We have updated our privacy policy to be more clear and meet the new requirements of the GDPR. By continuing to use our site, you accept our revised Privacy Policy .

Home

Trending News

Greenberg Traurig, LLP Law Firm

Related Practices & Jurisdictions

  • Election Law / Legislative News
  • Insurance Reinsurance & Surety
  • Construction Law
  • Real Estate

florida assignment of benefits 2022

On April 26, 2022, Governor Ron DeSantis signed a  proclamation  calling on the Florida Legislature to convene for a special session in response to Florida’s current property insurance market. The formal call was to consider legislation related to property insurance, reinsurance, changes to the Florida building code to improve affordability of property insurance, the Florida Office of Insurance Regulation, civil remedies, and appropriations. The proclamation called for the special session to convene from May 23 through May 27, but the Legislature was able to complete their work in only three days and adjourned Sine Die on May 25.

On May 20, the House and Senate released their respective identical proposals, which included measures related to reinsurance, roof solicitation, roof underwriting, bad faith, attorneys’ fees, insurer regulation and transparency, and building codes.

Representative Jay Trumbull (R-Panama City), House Appropriations chair, sponsored the House measures. In a memo to legislators, he stated that the policies they developed would help curb abuses in the market without creating unintended consequences.

Senator Jim Boyd (R-Bradenton), Senate Banking and Insurance Committee chair, sponsored the Senate bills. He explained to members in a memo that the Senate proposals looked to balance fair costs and protections for consumers while creating reasonable guardrails for insurance companies against frivolous litigation and fraudulent claims that drive up rates for everyone.

On the second day of the special session, Speaker of the House Chris Sprowls (R-Clearwater) announced the House and Senate had agreed to expand the call of Special Session D to include legislation relating to building safety. The legislation was aimed at reforming laws governing condominiums and cooperative associations in the wake of the June 2021 collapse of the Champlain Towers condominium in Surfside, Florida.

At the conclusion of the third day, legislators passed CS/SB 2D, relating to Property Insurance, and SB 4D, relating to Building Safety, both by Senator Boyd. Governor DeSantis signed SB 2D and SB 4D into law May 26. Except as otherwise expressly provided in the bills, they became effective upon the signature of the Governor. This GT Alert provides a breakdown of both pieces of legislation.

CS/SB 2D : Property Insurance

Reinsurance to assist policyholders (rap) program.

Authorizes a $2 billion reimbursement layer of reinsurance for hurricane losses directly below the mandatory layer of the Florida Hurricane Catastrophe Fund (FHCF). All eligible insurers must participate in the program.

The FHCF mandatory retention is $8.5 billion for the 2022-2023 contract year.

Requires the RAP program to reimburse 90% of each insurer’s covered losses and 10% of their loss adjustment expenses up to each individual insurer’s limit of coverage for the two hurricanes causing the largest losses for that insurer during the contract year.

Specifies that each insurer’s limit of the $2 billion in RAP coverage is their pro-rata market share among all insurers that participate in the RAP program. Thus, an insurer with five percent of the risk reinsured by RAP coverage would have a limit of coverage of $100 million.

Requires all eligible insurers to participate in the RAP program for one year. Insurers that do not have private reinsurance within the RAP layer of coverage for the 2022-2023 contract year must participate during the 2022-2023 contract year. Insurers that have private reinsurance at the RAP layer for the 2022-2023 contract year must defer using RAP program coverage until the 2023-2024 contract year. A RAP insurer that has any private reinsurance that duplicates RAP coverage for the 2022-2023 contract year must notify the State Board of Administration (SBA) (the program administrator) of the private reinsurance and must defer participation in the RAP program until the 2023-2024 contract year.

Prohibits an insurer from obtaining RAP coverage if the Insurance Commissioner certifies it is in “unsound financial condition.”

Specifies that insurers do not pay premiums for RAP program coverage but must reduce rates to reflect savings. Insurers that participate in the RAP program for 2022-2023 must reduce their rates by June 30, 2022, to reflect the savings from RAP coverage. Insurers that defer using the RAP program until 2023-2024 must reduce rates to reflect savings by May 1, 2023.

Provides funding for the RAP coverage through a $2 billion appropriation from the General Revenue Fund. Monies are only transferred to the SBA if the RAP program coverage must be paid because of a hurricane.

Specifies that, if funds are transferred to the SBA because of a hurricane, the SBA may request funds for the administration of the program from the General Revenue Fund, not to exceed $5 million.

Provides the RAP program expires July 1, 2025, if no General Revenue funds have been transferred to fund the RAP program. If such funds were transferred, the statute expires July 1, 2029, and all unencumbered RAP Program funds must be transferred back to the General Revenue Fund.

My Safe Florida Home Program

Appropriates $150 million from the General Revenue Fund to the Department of Financial Services’ My Safe Florida Home Program to provide hurricane mitigation inspections and matching grants for the performance of hurricane retrofitting on homestead single family homes with a value of $500,000 or less located in the wind-borne debris region set forth in the Florida Building Code. The My Safe Florida Home Program, which is administered by the Department of Financial Services, will provide financial incentives for Florida residential property owners to obtain free home inspections that would identify mitigation measures and provide grants to retrofit such properties, thereby reducing their vulnerability to hurricane damage and helping decrease the cost of residential property insurance.

Establishes additional eligibility criteria:

Requires that a homeowner who participates in the program agree to make his or her home available for inspection after the mitigation project is completed.

Requires that a building permit for initial construction of the home was made before Jan. 1, 2008.

Requires the home to have undergone an acceptable hurricane mitigation inspection after July 1, 2008.

Requires that grants awarded under the program provide $2 in grant funds for every $1 provided by the homeowner. Exceptions are provided for low-income homeowners. Applicants may receive up to $10,000 in program money.

Requires the Department of Financial Services to include in the annual report of program activities the average annual amount of insurance premium discounts and the total of such discounts received from insurers.

Allocates appropriated funds as follows:

$25 million for hurricane mitigation inspections.

$115 million for hurricane mitigation grants.

$4 million for education and consumer awareness.

$1 million for public outreach to contractors, real estate brokers, and sales associates.

$5 million for administrative costs.

Provides that any unexpended balance of appropriated funds remaining on June 30, 2023, reverts and is appropriated to the Department of Financial Services for the 2023-2024 fiscal year for the My Safe Florida Home program.

 Contractor Solicitation of Roof Claims

Prohibits contractors from making written or electronic communications that encourage or induce a consumer to contact a contractor or public adjuster for the purposes of making a property insurance claim for roof damage unless such solicitation provides notice that:

The consumer is responsible for the payment of any deductible.

It is insurance fraud punishable as a third-degree felony for a contractor to pay or waive an insurance deductible.

It is insurance fraud punishable as a third-degree felony to intentionally file an insurance claim containing false, fraudulent, or misleading information.

Separate Roof Deductible

Allows property insurers to include in the policy a separate roof deductible of up to two percent of the Coverage A limit of the policy or 50% of the cost to replace the roof. The policyholder must also be offered the option to decline the roof deductible by signing a form approved by the Office of Insurance Regulation (OIR). If a roof deductible is added to the policy at renewal, the insurer must provide a notice of change in policy terms and allow the policyholder to decline the separate roof deductible.

Requires that policyholders that select a roof deductible receive an actuarially sound premium credit or discount.

Provides that the roof deductible does not apply to:

A total loss to the primary structure in accordance with the valued policy law under s. 627.702, F.S., which is caused by a covered peril.

A loss caused by a hurricane.

A roof loss resulting from a tree fall or other hazard that damages the roof and punctures the roof deck.

A roof loss requiring the repair of less than 50% of the roof.

Specifies that when a roof deductible is applied, no other deductibles under the policy may be applied.

Specifies that a roof deductible only applies to a claim adjusted on a replacement cost basis.

Authorizes an insurer to limit the claim payment for a roof to the actual cash value of the loss to the roof until the insurer receives reasonable proof of payment by the policyholder of the roof deductible.

Requires a roof deductible provision to be clear and unambiguous.

Requires inclusion of the following disclosures:

On the page immediately behind the declarations page, notice that a roof deductible may result in high out-of-pocket expenses to the policyholder.

On the policy declarations page, prominent display of the actual dollar value of the roof deductible at issuance and renewal. Allows an insurer to limit payment on a roof claim to actual cash value until the policyholder pays the roof deductible.

Roofs | Insurer Underwriting

Prohibits an insurer from refusing to issue or refusing to renew a homeowner’s insurance policy insuring a residential structure with a roof that is less than 15 years old solely because of the age of the roof.

Requires that, if the roof is at least 15 years old, an insurer must allow a homeowner to have a roof inspection performed by an authorized inspector at the homeowner’s expense before requiring the replacement of the roof as a condition of issuing or renewing a homeowner’s insurance policy. The insurer may not refuse to issue or refuse to renew a homeowner’s insurance policy solely because of roof age if an inspection of the roof of the residential structure performed by an authorized inspector indicates that the roof has five years or more of useful life.

Insurer Claims Handling

Requires property insurers to conduct any physical inspection of the property related to a claim within 45 days of receiving proof of loss statements. Does not apply to hurricane claims.

Requires insurers to notify policyholders of their right to receive any detailed report generated by an insurer’s adjuster that estimates the amount of the loss. The report must be provided to the requesting policyholder within the later of seven days after the policyholder requests the report or the completion of the report.

Specifies insurers must provide a reasonable explanation of the claim decision in relation to the insurance policy, facts, and law. If the insurer makes a claim payment that is less than contained in the insurer’s adjuster estimate of the loss, the insurer must explain the discrepancy.

Civil Remedy

Requires a claimant to establish a property insurer breached the insurance contract in order for the claimant to prevail in a bad faith claim for extracontractual damages under s. 624.155(1)(b), F.S. Will apply to civil remedy actions based upon a property insurer:

Not attempting in good faith to settle claims when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for his or her interests;

Making claims payments to insureds or beneficiaries not accompanied by a statement setting forth the coverage under which payments are being made; or

Except as to liability coverages, failing to settle claims promptly, when the obligation to settle a claim has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy.

Assignment of Benefits (AOB)

Revises the definition of “assignment agreement” to include assignments executed by a party that inspects the property, clarifies that public adjuster fees are not an assignment agreement, and clarifies the requirement to provide a Notice of Intent to Initiate Litigation before filing suit.

Requires that a valid AOB specify that the assignee will hold harmless the assignor from all liabilities, including attorney fees.

Attorney Fees | AOB

Prohibits assignment of the right to obtain attorney fees in suits arising out of a property insurance policy to persons other than a named or omnibus insured or a named beneficiary under the policy. Result is that assignment agreements may occur, but the assignee vendor will no longer be able to recover attorney fees in suits against an insurer. Applies to property insurance lawsuits brought by vendor assignees against authorized insurers and surplus lines insurers.

Eliminates statutory language detailing the methodology for awarding attorney fees to plaintiffs or defendants in litigation brought by an assignee of benefits under a property insurance policy. The language is no longer necessary because the bill prohibits assignment of the right to recover attorney fees in suits arising out of a property insurance policy.

Attorney Fees | Fee Multipliers

Creates a new standard for the award of an attorney fee multiplier in property insurance litigation. The bill creates a presumption that in property insurance cases, attorney fee awards based on the Lodestar methodology are sufficient and reasonable. Attorney fee multipliers may only be awarded under rare and exceptional circumstances with evidence that competent counsel could not be hired in a reasonable manner.

Allows a court to award attorney fees when a first-party claimant’s property insurance suit is dismissed without prejudice for failure to provide a Notice of Intent to Initiate Litigation.

Attorney Fees | Dismissal for Failure to Provide Notice

Provides that a defendant insurer may obtain attorney fees and costs associated with securing a dismissal without prejudice for failure to provide the required Notice of Intent to Initiate Litigation at least 10 days before filing a suit against a property insurer.

Regulation of Insurers and Insurer Transparency

Requires the OIR to publish all orders, specified insurance industry data, and reports issued by the newly created Property Insurance Stability Unit. The scope of the Property Insurance Stability Unit is limited to matters related to homeowner and condominium unit owner insurance.

Requires the OIR within the annual statistical report to include an analysis of the availability of reinsurance to domestic insurers selling homeowner and condominium unit owner insurance in Florida.

Requires that the OIR include within its annual report additional data regarding property insurers against which delinquency or similar proceedings were instituted, a concise statement of the circumstances that led to each insurer’s delinquency, a summary of actions taken by the insurer and the OIR to avoid delinquency, and that shows results or status of each delinquency proceeding.

Requires the OIR to maintain and make available upon request reports relating to the health of the homeowner and condominium unit owner insurance market that include specified information regarding market trends and the percentage of policies written by voluntary carriers and Citizens Property Insurance Corporation.

Directs the OIR to make data publicly available detailing the statewide number of policies, amount of premium, number of cancellations, and other data for each property insurer. Specifies such information is not a trade secret.

Creates a Property Insurer Stability Unit within the OIR to aid in the detection and prevention of insurer insolvencies in the homeowner and condominium unit owner insurance market. Insurers must be referred to the unit for enhanced monitoring upon the occurrence of specified events. The unit must:

Provide enhanced monitoring when the OIR identifies significant concerns about various aspects of the insurer.

Conduct a target market conduct exam when there is reason to believe the insurer may be in an unsound financial condition.

Closely monitor insurer financial data.

Conduct annual catastrophe stress tests of domestic insurers.

Update wind mitigation credits.

Review the causes of insolvency and business practices of insurers referred to the Division of Rehabilitation and Liquidation within the Department of Financial Services.

Twice annually, provide a report on the status of the homeowner and condominium unit owner insurance market.

Requires the OIR to execute an affidavit identifying the grounds for initiating delinquency proceedings against an insurer.

For an insolvency involving a domestic property insurer, the Department of Financial Services must:

Begin an analysis of the history and causes of the insolvency no later than the initiation of delinquency proceedings against the insurer;

Review the OIR’s regulatory oversight of the insurer.

Submit an initial report analyzing the history and causes of the insolvency no later than two months after the initiation of the delinquency proceeding;

Provide a special report within 10 days of identifying any condition or practice that may lead to insolvency in the property insurance marketplace; and

Submit a final report analyzing the history and causes of the insolvency and the OIR’s regulatory oversight within 30 days of the conclusion of the insolvency proceeding.

SB 4D : Building Safety

The current Florida Building Code requires that not more than 25% of the total roof area or roof section of any existing building or structure be repaired, replaced or recovered in any 12-month period unless the entire existing roofing system or roof section is replaced to conform to requirements of the code.

The bill requires that the Florida Building Code stipulate that when 25% or more of a roofing system or roof section is being repaired, replaced, or recovered, only the portion of the roofing system or roof section undergoing such work must be constructed in accordance with the current Florida Building Code in effect at that time.

The bill creates an exception to this provision for roof systems and roof sections built, repaired, or replaced in accordance with the requirements of the 2007 Florida Building Code or subsequent editions.

The bill also includes provisions relating to the regulation of condominiums and cooperative associations. Many of these provisions were the substance of legislation filed during the 2022 Regular Session in response to collapse of the condominium in Surfside, Florida.

Creates a statewide building milestone inspection requirement for condominiums and cooperative buildings that are three stories or higher in height 30 years after initial occupancy and 25 years after initial occupancy for buildings located within three miles of the coast.

Requires inspections every 10 years after a building’s initial “phase 1” inspection.

Requires an additional, more intensive inspection, or a “phase 2 inspection,” if a building’s phase 1 inspection reveals substantial structural deterioration.

Requires building officials to provide written notice to associations when buildings must be inspected.

Requires phase 1 and phase 2 inspection reports be submitted to building officials and unit owners.

Provides local building officials with ability to assess penalties for failing to comply with the requirements for phase 1 and phase 2 inspections.

Requires condominiums and cooperatives to conduct structural integrity reserve studies every 10 years for buildings three stories or higher and prohibits waiver of funding for certain structural reserves.

Requires developers to complete structural integrity reserve studies for every building three stories or higher, prior to turning over an association to the unit owners.

Repeals the ability of developers to waive the collection of all types of reserve funds.

Requires structural integrity reserve study inspections, and phase 1 and phase 2 inspections to be performed by licensed engineers or architects.

Provides that structural integrity reserve studies, and phase 1 and phase 2 inspection reports are a part of an association’s official records and must be provided to a potential purchaser of a unit.

Provides that failing to perform a required structural integrity reserves study, or phase 1 or phase 2 inspection is breach of a board member or officer’s fiduciary duty.

Requires a community association manager to provide a milestone inspection report to a local building official, if the manager receives the report.

Current Legal Analysis

More from greenberg traurig, llp, upcoming legal education events.

Epstein Becker and Green, P.C. Law Firm

Sign Up for e-NewsBulletins

Cozen O'Connor's Property Insurance Law Observer

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

' src=

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.

Print Page

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

propertyinsurancelawobserver

  • 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
  • Florida Appellate Court Holds that Deadline to Report Claims Does Not Nullify Prompt Notice Provision
  • Florida Begins New Era with Major Property Insurance Reforms
  • Texas Court of Appeals Nixes Plaintiff’s Attorney’s Fees Award Because Offsets Preclude Prevailing Party Status
  • Fifth Circuit Resolves Split Over Chapter 542A Election of Liability for Agents
  • 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

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 assignment of benefits 2022

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.

Back to top

florida assignment of benefits 2022

5 trends to watch in 2024 with Florida's property insurance market

Hurricane Ian aftermath in Florida

  • Greenberg Traurig LLP Follow

florida assignment of benefits 2022

Fred E. Karlinsky, who is co-chair of Greenberg Traurig's insurance regulatory and transactions practice group, represents insurance companies, reinsurers, and related entities on regulatory, transactional, corporate, and governmental affairs matters. He is also a recognized authority on national insurance regulatory and compliance issues. He is based in Fort Lauderdale and Tallahassee, in Florida, and can be reached at [email protected].

florida assignment of benefits 2022

Timothy F. Stanfield, a shareholder with Greenberg Traurig's Florida government law and policy practice, represents private and public-sector clients before the Florida Legislature, cabinet, and state agencies. His practice is largely focused on regulated industries, including insurance, land use, and alcoholic beverages. He also represents local governments, trade associations, and clients participating in Florida's procurement process. He is based in Tallahassee and can be reached at [email protected].

florida assignment of benefits 2022

Christian Brito is an of counsel at Greenberg Traurig and focuses his practice on national insurance regulatory and compliance matters. He represents a wide variety of entities in the insurance industry, including insurers, reinsurers, managing general agencies, producers, third-party administrators, and claims companies, with regulatory, transactional, corporate, and governmental affairs matters. He is based in Fort Lauderdale and can be reached at [email protected].

Read Next / Editor's Picks

The seal of the U.S. Securities and Exchange Commission (SEC) is seen at their headquarters in Washington, D.C., U.S., May 12, 2021. REUTERS/Andrew Kelly/

Industry Insight

florida assignment of benefits 2022

Mike Scarcella, David Thomas

florida assignment of benefits 2022

Karen Sloan

florida assignment of benefits 2022

Henry Engler

florida assignment of benefits 2022

Diana Novak Jones

IMAGES

  1. Florida Insurance Ruling Sets Precedent on New Assignment-of-Benefits

    florida assignment of benefits 2022

  2. Insurance Assignment Of Benefits Form

    florida assignment of benefits 2022

  3. Assignment Of Benefits Form 2020-2022

    florida assignment of benefits 2022

  4. Assignment Of Benefits Form Template

    florida assignment of benefits 2022

  5. Assignment Of Benefits (AOB) Form

    florida assignment of benefits 2022

  6. What Roofers Need to Know About the New Assignment of Benefits Legislation

    florida assignment of benefits 2022

COMMENTS

  1. Assignment of Benefits (AOB)

    Assignment of Benefits (AOB) Have you heard of the term assignment of benefits? Do you know how it impacts you? An AOB is an agreement that, once signed, transfers the insurance claims rights or benefits of your insurance policy to a third party.

  2. The Current State of Assignment of Benefits Litigation in Florida

    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]

  3. PDF ASSIGNMENT OF BENEFITS

    SENATE BILL 2A (2022) UPDATE: Any policy that was issued prior to January 1, 2023, provides a policyholder with the right to assign insurance benefits to a 3rd party as long as you have not chosen to give up that right in order to receive a premium discount. WHAT IS AN ASSIGNMENT OF BENEFITS (AOB)?

  4. 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.

  5. 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...

  6. The Florida Contractor's Guide to AOBs: Laws, Requirements ...

    In December 2022, the Florida legislature enacted Senate Bill 2-A, a game-changing law that transformed the property insurance landscape in Florida. Among other major changes to Florida property insurance and claims, SB 2-A effectively outlawed the future use of assignment of benefits in property insurance claims.

  7. What Florida's New Insurance Statute (SB-2A) Means for Contractors

    Section 627.7152—Florida's assignment of benefits law passed in 2019 and amended in May of 2022—is changed in two significant ways. First, 627.7152 (2) (a) (1) is added, and reads as follows:

  8. Property Insurance Reform Laws Passed in Florida-Now What?

    ASSIGNMENT OF BENEFITS. Finally, one of the most important aspects of the December 2022 special session was to once and for all address and eliminate "assignment of benefits" or "AOBs" in property damage claims. Accordingly, Florida Statute 627.7152, just enacted in 2019, was amended to eliminate AOBs in residential and property damage ...

  9. The AOB Guide for Florida Property Owners: Rights ...

    In Florida, the use of an assignment of benefits (AOB) has become increasingly popular as a means of streamlining property insurance claims. They also have come under fire from insurance carriers, and as part of the recent sweeping property insurance reforms in Florida, the Florida legislature banned the future use of AOBs in property claims.

  10. Florida Insurance Reform Law SB-2D Approved

    On May 24, 2022, the Florida Senate voted 30-9 to approve SB-2D, and then on May 25, 2022, the House passed the bill with a vote of 95-14. ... The definition of an "Assignment Agreement" pursuant to § 627.7152 is amended to mean "any instrument by which post-loss benefits under a residential property insurance policy or commercial ...

  11. Impact of Florida's New Assignment of Benefits Law: HB 7065

    Impact of Florida's New Assignment of 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.

  12. Assignment Limitations Begin with New Year

    The Florida legislature therefore took a more definitive step in the December 2022 special session. The new law specifies that with respect to any residential or commercial property insurance policy issued on or after January 1, 2023, assignment agreements are invalid and unenforceable.

  13. Chapter 627 Section 7152

    2022 Florida Statutes (including 2022C, 2022D, 2022A, and 2023B) Title XXXVII INSURANCE. Chapter 627 INSURANCE RATES AND CONTRACTS Entire Chapter. ... an assignee may not receive an assignment of post-loss benefits under a residential property insurance policy in excess of the greater of $3,000 or 1 percent of the Coverage A limit under such ...

  14. Florida Appeals Court: Pre-Suit Notices Required in AOB Cases After

    In a decision that's being called a win for insurers, Florida's 4 th District Court of Appeals held last week that the statutory notice of intent to sue applies to all assignment-of-benefits ...

  15. Florida CFO Calls for Ban on Assignments of Benefits, Limits on Public

    A number of other states allow insurance policies to include non-assignment of benefits clauses. ... Categories: Southeast News Topics: assignment of benefits (AOB), Florida's ... October 20, 2022 ...

  16. Statutes & Constitution :View Statutes : Online Sunshine

    — Subject to its terms relating to assignability, any life or health insurance policy under the terms of which the beneficiary may be changed upon the sole request of the policyowner may be assigned either by pledge or transfer of title, by an assignment executed by the policyowner alone and delivered to the insurer, whether or not the pledgee o...

  17. Viewpoint: Florida Begins New Era with Major Property Insurance Reforms

    The reforms further eliminate one-way attorney fee awards to policyholders and ban assignment-of-benefits agreements. ... At the end of 2022, assignments of benefits to service providers will be ...

  18. Florida's Property Insurance Reform: The Impact on Carriers and

    The Florida Legislature passed Senate Bill 2-A ("SB2A" or the "Act"), which was signed into law on December 16, 2022. The Act has the potential to significantly reduce litigation of first ...

  19. Fla. Contractors File Suit Challenging Assignment of Benefits Law

    A group of contractors wasted little time in challenging the constitutionality of a law approved at the Florida Legislature's special session last week, one the restoration companies argue ...

  20. Florida Passes Property Insurance Law During Special Session

    May 2022 Special Session of Florida Legislature Concludes with Passage of Legislation Impacting Property Insurance and Building Safety by: Fred E. Karlinsky , Timothy F. Stanfield , Christian...

  21. Florida's "Assignment of Benefits" Bill: A Guide Through the New

    This week, after 7 years of failed efforts, the Florida Legislature passed a meaningful Assignment of Benefits ("AOB") reform bill. Florida Governor Ron DeSantis announced yesterday that he would sign the legislation designed to cut back on abusive AOBs, a practice that has plagued the hurricane-prone state.

  22. Florida's assignment of benefits crisis

    DOWNLOAD TO PDF 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.

  23. 5 trends to watch in 2024 with Florida's property insurance market

    In a special session in late 2022 and during the 2023 Florida Legislative session, lawmakers implemented massive changes to the way claims are processed. ... fees and the assignment of benefits ...

  24. Statutes & Constitution :View Statutes : Online Sunshine

    (2) 1 (a) An assignment agreement must: 1. Be executed under a residential property insurance policy or under a commercial property insurance policy as that term is defined in s. 627.0625 (1), issued on or after July 1, 2019, and before January 1, 2023. 2. Be in writing and executed by and between the assignor and the assignee. 3.