assignment of benefits florida statute

Cozen O'Connor's Property Insurance Law Observer

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

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

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

627.7152 Assignment agreements.—

(2)(a) An assignment agreement must:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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The Current State of Assignment of Benefits Litigation in Florida

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[12] Id. at 8.

[13] Id. at 4.

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

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

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

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

[23] Id. at 13.

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

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

[29] Id. at 14.

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

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

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

[38] Fla. Stat. § 627.7153 (2019).

[39] Id. § 627.7153(2)(a)-(d).

[40] O’Connor, supra note 36.

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

[44] Ash, supra note 1.

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

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

[58] Ash, supra note 1.

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The Florida Contractor’s Guide to AOBs: Laws, Requirements, and FAQs

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. But they’re not gone yet — at least for insurance policies issued before 2023.

But even for those pre-2023 policies, Florida law extensively regulates the use of AOBs. Whether you’re a roofer, restoration pro, or general contractor, you need to know about these rules and regulations if you want to legally use an AOB in Florida. The cost of violating these rules is high, often meaning the AOB is void and entirely unenforceable! So read on to make sure you comply with Florida AOB law.

Table of Contents

How Recent Property Insurance Reforms in Florida Affect AOBs

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. Under the new reforms, any homeowner’s insurance policy or commercial property insurance policy that issued on or after January 1, 2023 is not eligible for an AOB.

In other words, due to the 2022 Florida property insurance reforms, neither homeowners nor business property owners can enter an AOB if their insurance policy issued on or after January 1, 2023 .

Is an Assignment of Benefits Enforceable under Florida Law?

Maybe. The answer depends on whether the underlying policy issued before January 1, 2023, and whether the assignment of benefits complies with all the requirements of Section 627.7152, Florida Statues. If the answer to either of those questions is no, then the AOB is not enforceable for property claims in Florida.

Requirements for an Enforceable AOB in Florida

The issue of whether an AOB in Florida is enforceable is complicated. To make the issue more understandable, we’ve broken it down in the sections below.

The Underlying Policy Must Have Issued Before January 1, 2023

As we’ve said already, the threshold question for whether an AOB is enforceable in Florida is when the applicable policy issued. If the policy issued on or after January 1, 2023, that’s the end of the story — any AOB based on that policy is unenforceable, full stop.

The AOB contract must meet the requirements of Section 627.7152(2), Florida Statutes.

If the insurance policy issued before 2023, then the AOB still must comply with the rest of Section 627.7152, Florida Statutes. In particular, under Section 627.7152(2)(a), an assignment of benefits is not enforceable in Florida unless the AOB contract meets all of the following requirements:

The AOB contract must be in writing and signed by both parties.

Florida law requires that an AOB contract “[b]e in writing and executed by and between the assignor and the assignee.” Section 627.7152(2)(a)(2), Florida Statutes .

This one is straightforward: An AOB isn’t enforceable in Florida unless both your company and the policyholder sign a written AOB contract.

The AOB contract must explicitly allow the policyholder to rescind the AOB without penalty within certain periods

Florida law requires that an AOB contract “[c]ontain 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.” Section 627.7152(2)(a)(3), Florida Statutes .

Don’t forget, this provision doesn’t just give a policyholder rights to rescind an AOB within the time periods stated above — it requires that the AOB contract actually contain the statutory language giving the policyholder those rights.

Also, the AOB contract needs to include all of this statutory language. At least one court has suggested that if even part of this language is missing, then the AOB does not meet the requirements of Section 627.7152, Florida Statues, and is therefore invalid and unenforceable. JPJ Servs. LLC v. New Hampshire Ins. Co. , No. 21-14329-CIV, (S.D. Fla. June 3, 2022) .

The AOB contract must explicitly require you to notify the insurance company about the AOB

Florida law requires that an AOB contract “[c]ontain 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. Delivery of the copy of the assignment agreement to the insurer may be made: a. By personal service, overnight delivery, or electronic transmission, with evidence of delivery in the form of a receipt or other paper or electronic acknowledgment by the insurer; or b. To the location designated for receipt of such agreements as specified in the policy.” Section 627.7152(2)(a)(4), Florida Statutes .

When the AOB contract is signed, it must contain an itemized, per-unit cost estimate of the repair work.

Florida law requires that an AOB contract “[c]ontain a written, itemized, per-unit cost estimate of the services to be performed by the assignee.” Section 627.7152(2)(a)(5), Florida Statutes .

Two important notes here.

First, you need to attach the estimate to the AOB before the policyholder signs the AOB . Providing an estimate to the policyholder after the parties sign the AOB puts the AOB at risk of being attacked as unenforceable. Several Florida contractors have learned this the hard way. In one case, a court held that providing the estimate to the property owner just one day after the parties had signed the AOB rendered it unenforceable. JPJ Servs. LLC v. New Hampshire Ins. Co. , No. 21-14329-CIV (S.D. Fla. June 3, 2022) .

Second, the estimate needs to be detailed . A top-line price for the work won’t suffice. Nor will a standard pricing list for products or services. In fact, a Florida appellate court has specifically decided that a standard pricing list for remediation services attached to an AOB did not qualify as an “itemized, per-unit cost estimate” under Section 627.7152(2)(a)(5) and therefore the AOB was void and unenforceable. Air Quality Experts Corp. v. Fam. Sec. Ins. Co., 351 So. 3d 32 (Fla. Dist. Ct. App. 2022) .

The AOB contract must be limited to repairs or mitigation for dwellings and structures

Florida law provides that the AOB contract “must relate only to work to be performed by the assignee for services to protect, repair, restore, or replace a dwelling or structure or to mitigate against further damage to such property.” Section 627.7152(2)(a)(6), Florida Statutes .

The AOB contract must contain a very specific notice to the policyholder

Specifically, Florida law requires that the AOB contract contain the following notice in 18-point uppercase and boldfaced type:

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

Section 627.7152(2)(a)(6), Florida Statutes .

In the AOB contract, you must indemnify the policyholder.

Under Florida law, the AOB must “[c]ontain a provision requiring the assignee to indemnify and hold harmless the assignor from all liabilities, damages, losses, and costs, including, but not limited to, attorney fees.” Section 627.7152(2)(a)(7), Florida Statutes .

The AOB contract cannot contain a penalty or fee for rescission, processing checks, cancelling the agreement, or administrative costs.

Under Florida law, “an assignment agreement may not contain: 1. A penalty or fee for rescission under subparagraph (a)3.; 2. A check or mortgage processing fee; 3. A penalty or fee for cancellation of the agreement; or 4. An administrative fee.” Section 627.7152(2)(b), Florida Statutes .

The Law Requires You to Cooperate with Insurance Carriers

Florida law set out very specific actions that a roofer, mitigation pro, restoration specialist, or other contractor working under an AOB must take when dealing with an insurance company. The requirements are specific enough that it’s worth reproducing the statutory language directly:

A [contractor, roofer, restoration pro, etc.] (a) Must provide the assignor with accurate and up-to-date revised estimates of the scope of work to be performed as supplemental or additional repairs are required. (b) Must perform the work in accordance with accepted industry standards. (c) May not seek payment from the assignor exceeding the applicable deductible under the policy unless the assignor has chosen to have additional work performed at the assignor’s own expense. (d) Must, as a condition precedent to filing suit under the policy, and, if required by the insurer, submit to examinations under oath and recorded statements conducted by the insurer or the insurer’s representative that are reasonably necessary, based on the scope of the work and the complexity of the claim, which examinations and recorded statements must be limited to matters related to the services provided, the cost of the services, and the assignment agreement. (e) Must, as a condition precedent to filing suit under the policy, and, if required by the insurer, participate in appraisal or other alternative dispute resolution methods in accordance with the terms of the policy. Section 627.7152(4), Florida Statutes .

Limited Reimbursements for Emergency Repair AOBs

Contractors should know that Florida law limits insurance reimbursements for emergency repairs, such as roof tarping and water mitigation. Specifically, Section 627.7152(2)(c), Florida Statutes , caps insurance reimbursements for AOB repairs made under “urgent or emergency circumstances” at $3,000 or 1 percent of the applicable Coverage A limit, whichever is greater. Section 627.7152(2)(d), Florida Statutes . In addition, if the AOB contract provides for reimbursement beyond these limits, the AOB is invalid and unenforceable. The statute defines “urgent or emergency circumstances” as “a situation in which a loss to property, if not addressed immediately, will result in additional damage until measures are completed to prevent such damage.”

Collecting Against Policyholders Prohibited

By signing an AOB, you permanently waive your right to collect from or sue the policyholder for payments owed for services described in the AOB. This waiver of your right to collect or sue is fundamental to the AOB, and specifically covered by statutes. In Florida, the waiver applies even if the policyholder rescinds the AOB or the AOB is later held to be invalid.

There are a few important exceptions to the general waiver above. Specifically, a policyholder is responsible for:

Any applicable deductible.
Any betterment ordered and performed that is approved by the named insured.
Any contracted work performed before the assignment agreement is rescinded.

Section 627.7152(7), Florida Statutes .

Statute of Limitations › Florida › Assignment of Benefits (AOB)

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Assignment of Benefits in Florida Will Soon Be Dead and Are Now Critically Examined

Recent Florida legislation makes the assignment of benefits for a property insurance policy illegal in Florida. Recent cases demonstrate that such assignment of benefit contracts will be critically examined by courts when insurance companies raise issues about their validity.

Last week, a Florida appellate Court ruled that a proposed assignment of benefit contract was void. 1 It noted the insurer’s argument and the issue to be determined:

Citizens moved to dismiss the complaint with prejudice, contending that the assignment of benefits agreement, on its face, failed to comply with section 627.7152(2) (a)4., Florida Statutes (2021) (requiring that an assignment of benefits agreement ‘[c]ontain a written, itemized, perunit cost estimate of the services to be performed by the assignee’) rendering the assignment agreement invalid and unenforceable. Id. § 627.7152(2)(d) (providing: ‘An assignment agreement that does not comply with this subsection is invalid and unenforceable.’) More specifically, Citizens contended the assignment agreement did not contain ‘a written, itemized, per-unit cost estimate of the services to be performed by assignee’ as required by the statute. In response, Total Care contended that the assignment agreement contained an itemized per-unit cost estimate in compliance with the statute; Citizens lacked privity to challenge the assignment agreement; and non-compliance with the statute would render the assignment agreement voidable, not void, and—if voidable— Citizens would have no standing to challenge the assignment agreement since it was not a party to, or third-party beneficiary of, the assignment agreement.

The court noted that prior legislation required an estimate which was itemized:

Enacted by the legislature in 2019, section 627.7152, Florida Statutes (2021), governs assignment of benefits agreements. Subsection (2)(a) enumerates several requirements for a valid and enforceable assignment of benefits agreement. Relevant to the instant case, the statute requires: ‘An assignment agreement must… [c]ontain a written, itemized, per-unit cost estimate of the services to be performed by the assignee.’… In addition, section (2)(d) provides: ‘An assignment agreement that does not comply with this subsection is invalid and unenforceable.’

A mere listing of costs and services was found not to be sufficient:

While Total Care contends this document meets the statute’s requirement of ‘a written, itemized, per-unit cost estimate of the services to be performed by the assignee,’ we conclude it falls far short. It is not tailored to the insured or to the services to be performed on this particular property. Instead, it is simply a listing of services offered by Total Care, divided into two categories—’Emergency Service Price’ and ‘Non-Emergency Prices.’ The services listed under the two categories overlap nearly completely (the emergency category lists twenty-two services, while the non-emergency category lists eighteen identical services), with the difference being the cost of an available service performed on an emergency versus nonemergency basis. Such a generic menu of services available to any customer manifestly fails to comply with the ‘itemized, per-unit cost estimate of the services to be performed’ required by section 627.7152(2)(a) 4. Indeed, this document is not an ‘estimate’ at all, because it fails to set forth: the specific services being performed by Total Care on Mr. Bernal’s property;….”

The court cited with approval a similar case ruled upon last year:

We find persuasive the reasoning and holding of our sibling court in Air Quality Experts Corp. v. Fam. Sec. Ins. Co. , 351 So. 3d 32 (Fla. 4th DCA 2022), which is indistinguishable in all material respects from this case. In Air Quality, an assignee under a homeowner’s property insurance assignment agreement submitted bills to the insurer. When the insurer refused to pay, the assignee sued, attaching to the complaint the assignment agreement contract and two invoices. The assignment agreement included ‘a standard price list of the types of services offered by the assignee with their unit price.’ As the Fourth District explained, ‘[t]here was nothing in the attachment which tied the price list to the insured’s home so that it could be considered an estimate.’

The bottom line is that restoration contractors should expect their assignment of benefit contracts to be challenged by insurers in Florida. Those assignments will have to meet the letter of the law to be enforceable. Before long, this will be antiquated law because all assignments will eventually be disallowed based on the recently passed legislation.

Thought For The Day

Lawyers spend a great deal of their time shoveling smoke.

—Oliver Wendell Holmes, Jr.

1 Total Car Restoration v. Citizens Prop. Ins. Corp. , No. 3D22-711, 2023 WL 2505937 (Fla. 3d DCA Mar. 15, 2023) .

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Decision Requiring Strict Compliance with §627.7152 Provides Insurance Carriers With Another Tool to Combat Litigation of Assignment of Benefit Claims

In The Kidwell Group, LLC, d/b/a Air Quality Assessors of Florida v. United Property & Casualty Insurance Company , the Fourth District Court of Appeal upheld a dismissal of a breach of control suit brought by an assignee. The court found that an estimate attached to the complaint from five days after the date the AOB was executed did not satisfy the requirement that the Assignment contain a written itemized, per-unit cost estimate of the services to be performed.

On June 15, 2022, the Fourth District Court of Appel upheld a lower court’s dismissal of a breach-of-contract suit brought by an Assignment of Benefit (AOB) holder (assignee) because the AOB was invalid and unenforceable. Under Florida law, a valid AOB allows an assignee (such as water remediation companies, roofers and contractors) to receive benefits under a policyholder’s insurance policy in exchange for providing services or repairs relating to the policyholder’s property damage claim. Due to the increase in the number of entities seeking to provide services pursuant to an AOB, many Florida homeowners unwittingly engaged repair providers and executed AOBs in exchange for their services. Many times, after an AOB had been obtained from the policyholders, assignees subsequently, and often unilaterally, expanded the scope of the services to be provided or changed the prices for their services. Additionally, many companies began to take advantage of homeowners by offering a multitude of tests, assessments and evaluations, ostensibly related to their property damage claims, in an effort to obtain an AOB and bill their insurance carriers for the costs. As a result, Florida insurance carriers began seeing an ever-increasing tidal wave of assignee-related claims for questionable services and excessive amounts. This influx in claims ultimately translated into an influx of litigation between assignees and insurance carriers.

In an effort to curb this rampant litigation, the Florida Legislature passed §627.7152, detailing the specific guidelines an AOB must adhere to in order to be valid and enforceable. The law went into effect on July 1, 2019. The Statute requires that an AOB:

(1) be in writing and executed by and between the policyholder and the service provider;

(2) contain a provision that allows the policyholder to rescind the AOB without a penalty within a certain time;

(3) contain a provision requiring the service provider to provide a copy of the AOB to the policyholder’s insurance carrier;

(4) contain a written, itemized, per-unit cost estimate of the services to be performed by the service provider;

(5) relate only to specific types of repairs and services at the property;

(6) specifically notify the policyholder that they are giving up rights under their insurance policy which may result in litigation; and

(7) contain a provision requiring the service provider to protect the policyholder from any resulting liabilities, costs or losses.

In addition to indicating what an AOB must have, the Florida Legislature also specified what an AOB may not have, including penalties or fees for cancellation, processing or administration. Under the statute, an AOB that does not comply with these requirements is deemed to be invalid and unenforceable. Section 627.7152 also requires an assignee to provide the policyholder and the insurance carrier with a written notice of its intent to initiate litigation at least 10 business days before filing a lawsuit. The statute holds assignees’ feet to the fire by requiring that an AOB conform to specific, concrete, and uniform requirements or be deemed unenforceable.

The Fourth District Court of Appeal’s recent decision in Kidwell demonstrates just how strictly assignees will have to comply with §627.7152. In Kidwell , the AOB was deemed invalid and unenforceable because it was not in strict compliance with the requirements laid out in 627.7152. The court held that the AOB did not contain an itemized, per-unit cost estimate of the services to be performed, as required by law. In Kidwell, the plaintiff argued that it satisfied the requirements of § 627.7152 by providing the policyholder with an invoice dated five days after the AOB was signed. However, the court determined that a post-dated, unsigned invoice did not comply with the requirement that the AOB contain a per-unit cost estimate of the services to be performed and was, therefore, invalid.

In one of the first appellate rulings on this aspect, the Fourth District Court of Appeal’s decision in Kidwell has paved the way for other jurisdictions to reach the same decisive conclusion. It is the intent of the legislature that Statute 627.7152 will prevent assignees from potentially deceiving policyholders and insurance carriers by seeking reimbursement for inflated estimates and unnecessary repairs. The Kidwell decision’s strict enforcement of the statue will hold entities to account for their duplicitous tactics.

In an effort to get around the statute, Kidwell and other entities have argued that 627.7152 should not be applied retroactively to any claims on insurance policies issued prior to July 1, 2019, the effective date of the statute. However, the Second District Court of Appeal recently rejected that argument when it issued its opinion in The Kidwell Group, LLC d/b/a Air Quality Assessors of Florida a/a/o Robert and Maureen Mucciaccio v. American Integrity Insurance Company of Florida , 347 So.3d 501 (Fla. 2d DCA Sept. 16, 2022). There, the court found that the assignee has no rights to an insured claim until it executes a valid AOB with the policyholder. Therefore, the law in effect on the date the parties executed the AOB controls, not the law in effect when the insurance policy was issued. As a result, the court held that Florida Statute 627.7152 applied to Kidwell’s AOB as it was executed after the statute’s July 1, 2019, effective date.

As is clear from both of the recent Kidwell cases, the trend is to hold the assignee accountable and ensure they are providing reasonable services at reasonable costs. Strict compliance with Florida Statute §627.7152 for any AOB executed after July 1, 2019, will be required.

*Danielle is a shareholder in our Fort Lauderdale, Florida, office who can be reached at 954.847.4939 or [email protected] . Jennifer is an associate in our Tampa, Florida, office who can be reached at 813.898.1815 or [email protected] .

Defense Digest , Vol. 28, No. 12, December 2022, is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2022 Marshall Dennehey. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact [email protected] .

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

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

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

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

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

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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.

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COMMENTS

Statutes & Constitution :View Statutes : Online Sunshine
The 2023 Florida Statutes (including Special Session C) 627.7152 Assignment agreements.—. (a) "Assignee" means a person who is assigned post-loss benefits through an assignment agreement. (b) "Assignment agreement" means any instrument by which post-loss benefits under a residential property insurance policy or commercial property ...
Chapter 627 Section 7152
Title XXXVII INSURANCE. Chapter 627 INSURANCE RATES AND CONTRACTS Entire Chapter. SECTION 7152. Assignment agreements. 627.7152 Assignment agreements.—. (1) As used in this section, the term: (a) "Assignee" means a person who is assigned post-loss benefits through an assignment agreement. (b) "Assignment agreement" means any ...
Assignment of Benefits (AOB)
Assignment of Benefits (AOB) is an agreement that transfers the insurance claims rights or benefits of the policy to a third party. An AOB gives the third party authority to file a claim, make repair decisions, and collect insurance payments without the involvement of the homeowner. AOBs are commonly used in homeowners' insurance claims by ...
An Update on Assignments of Benefits for Florida Contractors
As of the date of this post, under the December 16, 2022 revisions to 627.7152, Florida Statutes, contractors can use an assignment of benefits, and homeowners can enter into an assignment of benefits, if the insurance policy being assigned was issued on or after July 1, 2019 and before January 1, 2023. Based on this language, it appears that a ...
Impact of Florida's New Assignment of Benefits Law: HB 7065
Benefits Law: HB 7065. On April 26, 2019, Florida Governor Ron DeSantis signed into law Florida House Bill 7065. The law, which took effect on July 1, 2019, was designed to reduce the amount of assignment of benefits ("AOB") agreements that could be signed between entities and insureds. Governor DeSantis signed H.B. 7065 into law ...
Statutes & Constitution :View Statutes : Online Sunshine
The 2023 Florida Statutes (including Special Session C) 627.7153 Policies restricting assignment of post-loss benefits under a property insurance policy.—. (1) As used in this section, the term "assignment agreement" has the same meaning as provided in s. 627.7152. (a) The insurer makes available to the insured or potential insured at the ...
Section 627.7152
The Florida Legislature passed House Bill 7065 ("HB 7065" or the "Act"), which takes effect today, July 1, 2019, as Section 627.7152, Florida Statutes.The Act regulates post-loss assignment of benefits ("AOB") contracts entered into for services to protect, repair, remediate, restore, or replace property under a residential property insurance policy or commercial property insurance ...
Statutes & Constitution :View Statutes : Online Sunshine
The 2023 Florida Statutes (including Special Session C) 627.638 Direct payment for hospital, medical services.—. (1) Any health insurance policy insuring against loss or expense due to hospital confinement or to medical and related services may provide for payment of benefits directly to any recognized hospital, licensed ambulance provider ...
JD Supra: Florida's "Assignment of Benefits" Bill: A Guide Through the
The bill establishes several new sections of the Florida Statutes, including Fla. Stat. § 627.7152. § 627.7152(2)(a) sets requirements for a proper assignment of benefits: 627.7152 Assignment ...
Florida's "Assignment of Benefits" Bill: A Guide Through the New
The bill establishes several new sections of the Florida Statutes, including Fla. Stat. § 627.7152. § 627.7152(2)(a) sets requirements for a proper assignment of benefits: 627.7152 Assignment agreements.— (2)(a) An assignment agreement must: 1) Be in writing and executed by and between the assignor and the assignee.
The Current State of Assignment of Benefits Litigation in Florida
By: Senior Counsel Nhan T. Lee with Associate Wayne A. Comstock. On May 25, 2022, Florida lawmakers approved property insurance reforms that remove attorney's fees, with respect to assignment of benefits ("AOB") property insurance litigation. [1] One-way attorney's fees are a longstanding problem in Florida, [2] and the reforms come at a time when AOB litigation increasingly affects ...
Chapter 627 Section 422
2023 Florida Statutes. SECTION 422 Assignment of policies or post-loss benefits. 627.422 Assignment of policies or post-loss benefits.—A policy may be assignable, or not assignable, as provided by its terms. Any such assignment shall entitle the insurer to deal with the assignee as the owner or pledgee of the policy in accordance with the ...
Florida Insurance Ruling Sets Precedent on New Assignment-of-Benefits Law
The state legislature added Florida Statutes Sec. 627.7152, which covered assignment agreements and required contractors to follow new rules to prevent them from taking advantage of homeowners and ...
The Florida Contractor's Guide to AOBs: Laws, Requirements ...
How Recent Property Insurance Reforms in Florida Affect AOBs. 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.
Statute of Limitations › Florida › Assignment of Benefits (AOB)
Two years after implementing meaningful assignment of benefits reform, Florida enacted broader property insurance claim reform. On June 11, 2021, Governor DeSantis sign S.B. 76, which takes effect ...
Statutes & Constitution :View Statutes : Online Sunshine
The 2023 Florida Statutes (including Special Session C) 627.422 Assignment of policies or post-loss benefits.—. A policy may be assignable, or not assignable, as provided by its terms. Any such assignment shall entitle the insurer to deal with the assignee as the owner or pledgee of the policy in accordance with the terms of the assignment ...
Assignment of Benefits Resources
Assignment of Benefits Data Calls. Section 627.7152 (12), Florida Statutes, provides for the collection of data on residential and commercial property insurance claims paid under AOB. The first data report required under the new statute is due January 30, 2022. In June 2019, OIR issued Informational Memorandum OIR-19-02M to notify insurers that ...
Assignment of Benefits in Florida Will Soon Be Dead and Are Now
Citizens moved to dismiss the complaint with prejudice, contending that the assignment of benefits agreement, on its face, failed to comply with section 627.7152(2) (a)4., Florida Statutes (2021) (requiring that an assignment of benefits agreement '[c]ontain a written, itemized, perunit cost estimate of the services to be performed by the ...
Decision Requiring Strict Compliance with §627.7152 Provides Insurance
As of July 1, 2019, pursuant to Florida Statute §627.7152, there are specific guidelines that an assignment of benefits (AOB) must adhere to. Statute requires that an AOB must be in writing and executed, contain a provision that allows for rescission without a penalty, and include a written itemized, per-unit cost estimate of the services to ...
Florida's Assignment of Benefits Law Updated to Better Protect Consumers
The legislation, CS/HB 7065, is the biggest change to Florida law on assignment of insurance benefits in years. Whenever Florida is struck by a hurricane or other natural disaster, contractors flock to the area, going door to door and offering to start immediate repairs on homes and businesses if the property owner will sign over their ...
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 ...
Assignment Limitations Begin with New Year
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.
Carrera v. Social Security 1:2024cv21432
Date Filed Document Text; April 17, 2024: Filing 5 PAPERLESS ORDER granting #4 Motion to Reassign Case. In accordance with Administrative Order 2023-18, the Clerk shall randomly reassign this case to a District Judge, keeping the original Magistrate Judge assigned the case.
Statutes & Constitution :View Statutes : Online Sunshine
727.104 Commencement of proceedings.—. (1) (a) An irrevocable assignment and schedules shall be made in writing, containing the name and address of the assignor and assignee and providing for an equal distribution of the estate according to the priorities set forth in s. 727.114. (b) The assignment shall be in substantially the following form: