Article by Susan Odess in Today’s Daily Business Review: “Florida Legislature Passes Assignment of Benefits Insurance Claim Reform”

Siegfried Rivera
July 31, 2019


An article authored by shareholder Susan C. Odess was featured as the “Board of Contributors” guest commentary column in today’s edition of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper.  The article, which is titled “Florida Legislature Passes Assignment of Benefits Insurance Claim Reform,” discusses the ramifications of the new state law to reform the insurance industry practice known as assignment of benefits, or AOB.  Her article reads:

. . . The AOB process, which has been in place for decades, has become controversial in recent years because of an increase in residential water-damage claims, primarily for broken water pipes and leaks. Property owners sign over their claim benefits to contractors, which are then able to pursue payments directly from the insurers.

The proponents of AOBs say they help to ensure claims are properly paid, but the legislators supporting the bill have said it is aimed at curbing abuses of the AOB process. Insurance carriers have contended for many years that AOB fraud and the excessive litigation it generates have led to higher property-insurance rates.

The new law limits attorney fees in AOB lawsuits filed by contractors against insurers. The legal fees will be calculated using a set formula, but the caps would not apply to lawsuits filed by policyholders.

The law also enables insurance companies to offer lower-cost policies that restrict or do not allow for assignments of benefits.

For property owners, the law will allow them to rescind their assignment agreements with contractors without penalty by submitting a written notice within 14 days of the execution of the agreement. They will also be able to rescind agreements at least 30 days after the date work on the property is scheduled to commence if the contractor 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 contractor has not begun substantial work on the property.

Contractors receiving an assignment from a policyholder will be required to promptly notify the insurer and provide it with detailed estimates in advance of performing the work. This will help to enable insurers to monitor costs as they are incurred and ensure contractors are not performing unnecessary repairs.

If litigation ensues after an assignment agreement, the contractor assignee has the burden to demonstrate that the insurer is not prejudiced by the assignee’s failure to maintain records of all services provided, cooperate with the insurer in the claim investigation, provide it with requested records and documents related to the services provided, and permit it to make copies of such records and documents.

Contractors will also be required to serve insurers with written notices at least 10 business days prior to filing suit. These notices must include 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 proof that its work has been performed in accordance with “accepted industry standards”. . .

Susan concludes by noting that the new Florida law is bringing significant changes to the AOB process, so property owners should rely on the guidance of highly experienced insurance attorneys and public adjusters when considering an assignment of benefits to a contractor after the filing of a claim.

Our firm salutes Susan for sharing her insights into this new law with the readers of the Daily Business ReviewClick here to read the complete article in the newspaper’s website (registration required).