Re: Client Update
Governor DeSantis Signs Assignment of Benefits Legislation
Governor DeSantis signed the recently passed assignment of benefits (“AOB”) reform legislation on May 23, 2019. As we updated you previously, the new legislation will amend Florida Statutes Section 627.422, the assignment of polices, and create Sections 627.7152 and 627.7153, which will be effective July 1, 2019.
Sections 627.7152 and 627.7153 will apply to assignments of post-loss benefits under residential and commercial property insurance policies “to or from a person providing services to protect, repair, restore, or replace property or to mitigate against further damage to the property.”
Fla. Stat. § 627.7152(2)(a) sets forth a number of requirements that assignment agreements executed on or after July 1, 2019, must meet to be valid and enforceable. Among other things, assignment agreements must now:
(1) Be in writing and executed by and between the assignor and assignee;
(2) Contain a provision allowing rescission;
(3) Contain a provision requiring the assignee to notify the insurer of the assignment within three (3) days of execution of the assignment agreement;
(4) Contain a written, itemized, per-unit cost estimate of the services to be performed;
(5) Must relate only to work to protect, repair, restore or replace a dwelling or structure or to mitigate against further damage;
(6) Contain a required notice in 18-point uppercase and boldfaced typed font; and
(7) Contain a provision requiring the assignee to indemnify the assignor if an assignment of benefits is given when the insured’s insurance contract prohibits, in whole or in part, the assignment of benefits.
In the event of litigation, the statute also discusses the burden of the assignee: Fla. Stat. § 627.7152(3) states: 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.
Fla. Stat. § 627.7152(10) also changes the fee-shifting framework in AOB suits, providing the opportunity for insurers to recover their attorney’s fees under certain circumstances. If the difference between the judgment obtained by the assignee and the presuit settlement offer is:
(1) Less than 25% of the disputed amount, the insurer is entitled to an award of reasonable attorney fees.
(2) At least 25% but less than 50% of the disputed amount, no party is entitled to an award of attorney fees.
(3) At least 50% of the disputed amount, the assignee is entitled to an award of reasonable attorney fees.
Additionally, insurers will be able to issue policies that restrict, in whole or in part, the ability of insureds to enter into assignment agreements if certain conditions are met. These conditions include that the insurer must 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.
As always, we will continue to keep you advised regarding any pertinent legislative changes. Should you have any questions regarding the above, do not hesitate to contact the undersigned.
Very Truly Yours,
JOHN BOND ATKINSON