Insured Lacked Standing to Sue After Sale of Property

Jason Cleri | Property Insurance Coverage Law Blog | June 13, 2019

Assignment of Benefits (AOB) is certainly a hot button issue in the insurance industry. AOB occurs when an insured assigns its rights to insurance proceeds to a third-party that is not technically an insured under the insurance policy.

This usually comes in the form of a contractor or remediation company that steps in to help the insured after a loss, performs a service, then looks to the insurance company for payment under the insurance policy, rather than payment from the insured out-of-pocket. In its simplest form, many insureds welcome this assistance and the ability to remediate their loss without the exorbitant expense of paying a remediation or construction company. However, AOB could also come into play during the sale of a property to another party.

In August 2011, Liberty Transportation experience wind and water damage to their property in Connecticut due to a hurricane.1 Liberty filed a claim for lost income and lost fair rental value. Massachusetts Bay Insurance Company denied the claim and in September 2017, filed a motion to dismiss arguing that Liberty lacked standing to bring its claim for lost rental income for two commercial units at the property because it sold the property to a third party and had assigned any insurance money for any damages existing at the time of the January 2012 real estate closing. Liberty countered that argument by stating that the loss of rental income occurred before the formation of the real estate purchase agreement and that it retained an interest in the damaged units as a result of its decision to exercise a leaseback provision as set forth in the real estate purchase agreement.

Neither the trial court nor the appellate court were persuaded by Liberty’s arguments. The court stated that “the plaintiff lacks standing in the present case because, by virtue of the assignment, it has no legal interest in alleged insurance proceeds that are due and payable on account of damage to the property.”

I’ve handled many cases where insureds, for one reason or another, decide to sell the property after a loss but before the claim is finalized. It is always a good idea to add a clause in the closing that the seller is maintaining all rights to insurance proceeds for any outstanding claims if that is what was bargained for in the sale of the property. Otherwise, the seller may suffer financial harm from the decrease in price of the damaged property and the inability to recover the insurance proceeds.

I leave you with a quote from American biologist Leroy Hood, who said:

My fundamental philosophy is that you owe it to society to transfer to them any knowledge you have that might be useful.
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1 Liberty Transportation, Inc. v. Massachusetts Bay Ins. Co., 189 Conn.App. 595 (2019).

Assignment of Benefits (AOB) is certainly a hot button issue in the insurance industry. AOB occurs when an insured assigns its rights to insurance proceeds to a third-party that is not technically an insured under the insurance policy.

This usually comes in the form of a contractor or remediation company that steps in to help the insured after a loss, performs a service, then looks to the insurance company for payment under the insurance policy, rather than payment from the insured out-of-pocket. In its simplest form, many insureds welcome this assistance and the ability to remediate their loss without the exorbitant expense of paying a remediation or construction company. However, AOB could also come into play during the sale of a property to another party.

In August 2011, Liberty Transportation experience wind and water damage to their property in Connecticut due to a hurricane.1 Liberty filed a claim for lost income and lost fair rental value. Massachusetts Bay Insurance Company denied the claim and in September 2017, filed a motion to dismiss arguing that Liberty lacked standing to bring its claim for lost rental income for two commercial units at the property because it sold the property to a third party and had assigned any insurance money for any damages existing at the time of the January 2012 real estate closing. Liberty countered that argument by stating that the loss of rental income occurred before the formation of the real estate purchase agreement and that it retained an interest in the damaged units as a result of its decision to exercise a leaseback provision as set forth in the real estate purchase agreement.

Neither the trial court nor the appellate court were persuaded by Liberty’s arguments. The court stated that “the plaintiff lacks standing in the present case because, by virtue of the assignment, it has no legal interest in alleged insurance proceeds that are due and payable on account of damage to the property.”

I’ve handled many cases where insureds, for one reason or another, decide to sell the property after a loss but before the claim is finalized. It is always a good idea to add a clause in the closing that the seller is maintaining all rights to insurance proceeds for any outstanding claims if that is what was bargained for in the sale of the property. Otherwise, the seller may suffer financial harm from the decrease in price of the damaged property and the inability to recover the insurance proceeds.
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1 Liberty Transportation, Inc. v. Massachusetts Bay Ins. Co., 189 Conn.App. 595 (2019).

Florida’s AOB Reform Bill Became Effective July 1, 2019: How Does This Affect Me?

Beaujeaux de Lapouyade | Property Insurance Coverage Law Blog | July 8, 2019

My primary role as an attorney at Merlin Law Group is to represent the best interests of policyholders and get all benefits owed following a loss. But, I call it like I see it when approached with debatable inquiries from contractors and restoration companies.

Assignment of Benefits (“AOB”) is a controversial issue, which has been a recent topic of discussion in my conversations with policyholders and industry professionals. Chip Merlin summarizes both sides of the AOB debacle in his blog post, Assignment of Benefits Contracts are the Hot Topic of Discussion and Legislation in Florida, North Dakota and Elsewhere.

There are always two sides to every story. AOBs affect claim adjustments, take away important rights from policyholders, and can play a role in higher premiums. Nevertheless, AOBs can also provide stress relief to policyholders, affect the way contractors conduct business, and often guarantee payment to contractors for services rendered. The Florida Legislature finally decided to play ball on this hotly debated topic.

Florida’s new AOB Reform Bill went into effect on July 1, 2019. Florida Governor Ron DeSantis signed House Bill 7065 on May 23, 2019, which is now Laws of Florida Chapter 2019-57 (“Act”). The Act amended Florida Statutes Section 627.422 and created Sections 627.7152 and 627.7153, which contain definitions and required provisions for assignment agreements executed under residential and commercial property insurance policies.

The Florida Office of Insurance Regulation issued Informational Memorandum OIR-19-02M to notify insurers of the passage of the Act, discuss various provisions of the Act, and provide guidance to facilitate implementation.

Here are some noteworthy provisions of Florida’s newly effective AOB Reform Bill, which are important to know regardless of which team you are on.

Fee Shifting Switch

Insurers argue some contractors take advantage of the AOB system by performing excessive repairs or submitting inflated invoices to the insurer with the expectation that the insurer will inevitably pay the inflated invoice. An executed AOB allows a contractor (the assignee) to step into the shoes of the policyholder (the assignor) and receive payment directly from the insurer. An executed AOB also allows an assignee to pursue litigation against the insurer if an insurer refuses to pay an invoice.

Florida’s one-way fee provision is a vital protection for policyholders under Florida law. In an interview with Law360, Beth A. Vicchioli explained,

The current one-way attorney fee provision was always originally designed to help consumers who don’t have the same financial resources as their insurers to go through litigation.

She also noted,

Once these assignments started popping up then the insurer was no longer in litigation against a consumer, but against another sophisticated commercial company.

The new law imposes a formula, which allows an award for the assignee or the insurer or neither based on pre-suit settlement negotiations. This change does not apply to policyholders who file suit against their insurance company directly.

The gap between the carrier’s pre-suit settlement offer and the assignee’s pre-suit demand is the “disputed amount.” The new fee-shifting formula compares the differences between the disputed amount, the judgment obtained, and the settlement offer. If the judgment obtained is less than 25% of the disputed amount, then the insurer is entitled to an award of reasonable attorney’s fees. If the judgment obtained is 25% to 49% of the disputed amount, then neither party is entitled to an award of attorney’s fees. If the judgment obtained is 50% or more of the disputed amount, then the assignee is entitled to a reasonable attorney’s fee award.

Pre-Suit Requirements

Under the new Florida law, the assignee must notify the insurer of its intent to file a lawsuit and allow the insurer the opportunity to issue a coverage decision within the statutory timeframe required. The insurer must then respond with a settlement offer or demand for alternative dispute resolution within ten days.

Insurers Required to Offer More Options to Consumers

Insurers are now able offer policies restricting post-loss assignments to third parties with the caveat that the carrier notify the prospective policyholder of the restriction, and also offer policies allowing post-loss assignments with the same coverage. The policy restricting post-loss assignments to third parties must have lower premiums in exchange for the restriction.

Monitoring AOB Reform

Under the new AOB law, insurers must submit annual reports to the Florida Office of Insurance Regulation for each residential and commercial property insurance claim paid under an executed assignment. This requirement begins on January 30, 2022, which allows the OIR to monitor the effectiveness of the AOB reform.

It will be interesting to assess and monitor the impact of the new AOB legislation on insurance regulation. Merlin Law Group attorneys licensed in the Sunshine State are here to answer questions regarding Florida’s new AOB Reform Bill and its potential impact on businesses, policyholders, and other insurance professionals. It’s time to play ball.

Contractors Beware Taking AOB Contracts For Restoration Work: New Policy Forms Restricting AOB Contacts Discussed By Recent Insurance Bulletin

Chip Merlin | Property Insurance Coverage Law Blog | June 24, 2019

Assignment of benefits contracts for property damage claims may be going the way of the dinosaur in Florida. A recent Florida Insurance Bulletin notes that the new statute allows insurance companies to issue policies preventing an assignment of benefits if insurers offer a premium discount.

The bulletin outlines what insurers must do:

Section 2 of the Act creates Section 627.7153, Florida Statutes, which provides standards for policies that restrict the assignment of benefits in whole or in part under a property insurance policy. The new language provides that an insurer may restrict assignments of benefits under a property insurance policy in whole or in part only if it meets all of the following requirements:

• The insurer must also contemporaneously offer to the insured or applicant a policy that does not restrict assignment;

• The restricted policy must be offered at a lower cost than an unrestricted policy;

• The policy restricting assignment in whole must be offered at a lower cost than a policy restricting assignment in part; and

• The restricted policy must include, on the face of the policy or the declarations page, a statutorily required disclosure.

Insurers wishing to make available a policy that restricts in whole or in part an insured’s right to execute an assignment agreement must file such forms or endorsements and rates with the OIR for approval. The OIR will make every effort to approve these new policy forms and rates as soon as practicable. Rate filings made for these restricted policies must provide actuarial support for the difference in rate between an unrestricted policy and a policy that restricts assignment in whole or in part.

So, this is my take on the truth of this new law and what is going to happen:

  1. The truth is that this legislation passed because of the scapegoat publicity of a few lawyers and law firms filing thousands of lawsuits. Their actions and greed changed the regulatory and political landscape.
  2. Good, reputable contractors will be harmed by the law.
  3. Insurers will gain more leverage to pay less than adequate amounts to properly and legally complete quality restoration work.
  4. Bad contractors and bad lawyers gaming the insurance claim process are hurt very badly by the new law.
  5. Policyholders may find fewer scamming contractors and lawyers doing shoddy work and taking their rights but will also be faced with personally fighting for the quality of the construction they deserve with insurance companies caught in a competitive downward spiral, paying for as little as possible.
  6. Some of the AOB lawyers creating this mess will still find ways to market for cases and game the system with obvious loopholes in the statute’s written language. The insurance lobbyists have made an annuity with this legislation and will still be making money fixing what they failed to properly write into law in the last legislative session.

The resources of the Florida Office of Insurance Regulation are not infinite. While all this AOB flurry of discord and legislative activity has been going on, insurers have been busy rewriting Florida property insurance policies to reduce what have been otherwise nationally standard insurance benefits. Citizens Property Insurance Company is the leading bad actor in this regard.

Since the citizens of Florida should not be harmed by supporting leaders within the Citizens Property Insurance Company that they have paid for and created, it is time to start looking for a lot more transparency about the behind the scenes lobbying efforts and wrongful actions being made by this entity. It is also time to demand that the leaders running Citizens stop harming the policyholders and citizens they are supposed to serve. The Florida Office of Insurance Regulation needs to be more of a watchdog for consumers rather than a lapdog for insurers when it comes to accepting new policy forms limiting and restricting coverage.

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

John David Dickenson and Chad A. Pasterneck | Property Insurance Law Observer | April 26, 2019

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. In recent years, many contractors have taken advantage of Florida’s unique one-way attorney’s fee shifting statute for insurance coverage litigation. This rule has incentivized contractors to, via the assignment of benefits mechanism, charge property owners outlandish amounts and to then pursue needless, sometimes frivolous, and always expensive litigation against insurance companies.

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.

Recent Property Insurance Assignment of Benefits Legislation

Conroy Simberg | April 29, 2019

After 6 years, the Florida Legislature has finally passed what appears to be an effective crackdown on Assignment of Benefit (AOB) abuse that has plagued first-party property insurance for years. 

The Act creates Florida Statute 627.7152, which preliminarily defines “Assignment Agreements” as instruments by which post-loss benefits under a property insurance policy are assigned or transferred from insureds to persons providing protection, repair, restoration, or replacement services relating to damaged property.  The statute specifies that an assignment must:

  1. Be in writing and executed by both the assignor and assignee;
  2. Contain a provision permitting the assignor property owner to rescind the agreement without penalty by written notice of rescission: (1) within 14 days after execution of the agreement; (2) at least 30 days after the date work on the property is scheduled to begin if the work has not been “substantially performed;” or (3) if the assignee has not begun the work, and the assignment specifies no start date, then at least 30 days after execution of the agreement;
  3. Contain a provision requiring the assignee to provide its carrier with a copy of the executed assignment within 3 business days after its execution or the date the work begins, whichever date is earlier;
  4. Contain a written, itemized, per-unit cost estimate of the services the assignee expects to perform;
  5. Relate only to services to protect, repair, restore or replace a structure, or to mitigate against further damage;
  6. Contain a notice in 18-point typeface that, by executing the assignment, the property owner gives up certain rights to insurance proceeds to the assignee, and further notifying the owner of its right to rescind the agreement without penalty pursuant to the statute. The notice must also advise the owner that he or she remains responsible for compliance with the duties set forth in the insurance policy; and
  7. Contain a provision requiring the assignee contractor to indemnify and hold harmless the assignor property owner from all liability, including damages and attorney’s fees, if the policy prohibits, in whole or in part, the assignment of benefits.

The statute further provides that the assignment may contain neither any penalty or fee for rescission nor any other processing or administrative fee. 

The statute also contains a provision regarding emergency services necessary to protect property from further damage, limiting the assignment to $3,000 or 1% of Coverage A under a property insurance policy.  In order to fall within this limited exception to the statute’s notice and rescission provisions, the assignee must establish that there was “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.” 

If an assignee breaches its statutory duties, it bears the burden to prove that the insurer was not prejudiced by the breach.  These duties include: (1) the maintenance of records of all services provided; (2) cooperation with the insurer’s claim investigation; (3) provision to the insurer of requested records and documents related to the assignee’s services, including permitting the carrier to make copies of any such documents or records; and (4) the delivery of a copy of the executed assignment to the insurer within 3 business days after execution of the agreement. 

The statute also provides that the assignee: 

  1. Must provide the assignor with accurate and revised estimates if the scope of changes; 
  2. Must perform the work in accordance with “accepted industry standards;”
  3. May not seek payment from the assignor of any amount in excess of his or her deductible unless the assignor has chosen to have additional work performed at the assignor’s sole expense;
  4. Must, as a condition precedent to suit, and, if required by the insurer, submit to examinations under oath and provide recorded statements conducted by the carrier or its representative that are reasonably necessary based on the nature and scope of the work, provided that the examination and/or statement is limited to matters relating to the services, the cost of the services, and the assignment agreement;
  5. Must also, as a condition precedent to suit on the policy, and if required by the insurer, participate in appraisal or other alternative dispute procedures pursuant to the terms of the policy.

The statute will not modify or eliminate any managed repair arrangement contained in an insurance policy. 

The statute further provides that acceptance of an assignment by an assignee waives the assignee’s (or its subcontractors’) claims against a named insured for payments arising from the assignment.  These claimants also may not: (1) attempt to collect money from an insured; (2) sue an insured; (3) lien an insured’s property; or (4) report an insured to a credit agency for the failure to make payments arising from the assignment, unless the assignment has been rescinded or the agreement is deemed invalid.  The assignee further agrees to indemnify and hold harmless the assignor from all liability, including damages and attorneys’ fees, if the insured’s policy prohibits the assignment of benefits. 

In addition, the assignee must provide the named insured, insurer, and the assignor (if someone other than the named insured) with a notice of intent to initiate litigation before filing suit under the policy.  The notice must: (1) specify the damages in dispute; (2) state the amount claimed; (3) include a pre-suit settlement demand; (4) include itemized information on equipment, materials, supplies, and the number of labor hours expended, and; (5) provide proof that the work has been performed in accordance with accepted industry standards.  The carrier must respond in writing to the notice within 10 business days after receipt by either making a pre-suit settlement offer or requiring the assignee to participate in appraisal or other alternative dispute resolution procedures. 

The assignee is entitled to recover its attorney’s fees and costs under Florida Statute 57.105 and this new statute only under certain limited circumstances, and it may be required to pay the insurer’s attorneys’ fees.  Specifically, if the judgment obtained after suit is less than 25% of the disputed amount, the insurer is entitled to its reasonable attorneys’ fees.  If the judgment is at least 25% but less than 50% of the disputed amount, neither party may recover its fees and costs.  Finally, if the judgment is at least 50% of the disputed amount, the assignee is entitled to its reasonable attorneys’ fees and costs. 

If the insurer fails to inspect the property or provide authorization for the repairs within 7 calendar days after the first notice of loss, it may waive its entitlement to attorneys’ fees if suit is later filed.  The insurer does not waive this entitlement if its failure to comply results from: (1) a state of emergency; (2) factors beyond the insurer’s control that prevented an inspection or authorization for repairs; or (3) the named insured’s failure to permit an inspection of the property after the insurer has requested permission.  In that event, the insurer does not waive its right to pursue reasonable attorneys’ fees and costs if it prevails in a suit brought by the assignee. 

If an assignee has previously sued the carrier and voluntarily dismissed the action, but later refiles the same suit, the court may order the assignee to pay the insurer’s attorneys’ fees and costs resulting from the initial lawsuit.  The court must stay the proceedings in the later-filed lawsuit until the assignee has complied with the court’s order relating to fees and/or costs. 

The statute expressly does not apply to assignments granted to a subsequent purchaser of property who has an insurable interest in the property after a loss or a power of attorney that permits an insured’s representative to act on behalf of an insured with respect to the insured’s property insurance.  The statute also does not apply to liability coverage under a property insurance policy. 

Assuming that the bill is signed by the Governor, it will become effective as to any assignment of benefits executed on or after July 1, 2019.  Significantly, the statute also provides that, by January 30, 2022, property insurers must report data on each residential or commercial property claim paid or litigated under an assignment.  The specific types of data required to be reported will be determined by the Financial Services Commission. The Commission will presumably analyze whether the statute furthered the desired goal of reducing loss and loss-adjustment expenses, which was the impetus for the legislation. 

House Bill 7065 also enacts Section 627.7153, which permits an insurer to offer a policy that restricts, in whole or in part, an insured’s right to execute an assignment of benefits if: 

  1. The insurer also offers insureds the same coverage under a different policy that permits assignments of benefits;
  2. The restricted policy is available at a lower cost than an unrestricted policy;
  3. The policy prohibiting all assignments is cheaper than a policy prohibiting partial assignments; and
  4. Each restricted policy provides notice to the insured in bold-faced type that the policy does not permit unrestricted assignments, and that by selecting that policy, the insured waives his or her right to freely assign or transfer to a third party the post-loss property insurance benefits available under to the policy. 

Carriers must notify their insureds, at least annually, of the various coverage options available under the statute, and that notice must be part of and attached to the premium notice.  A named insured must reject a fully assignable policy in writing or electronically on a form approved by the Office of Insurance Regulation, and must specifically state that the policy restricts the assignment of benefits in a heading in regulated type size. 

Section 627.7153 becomes effective on July 1, 2019, and it applies to policies issued or renewed after that date. 

Finally, Florida Statute 627.422, which is an existing statute currently providing that post-loss assignments may or may not be assignable depending on their terms, is amended to provide that any such assignment entitles the insurer to deal with the assignee as the owner or “pledgee” of the policy in accordance with the terms of the assignment until the insurer has received at its home office written notice of termination of the assignment or notice from some other person claiming an interest in the policy that conflicts with the assignment.  The statute further provides that a property insurance policy may not prohibit assignments of post-loss benefits unless the policy complies with Florida Statute 627.7153. 

In the event that any portion of the foregoing law is deemed invalid, the Legislature has provided that any invalidity should not affect the remaining provisions of the statute, which are severable from any deemed invalid as, for example, unconstitutional. 

The foregoing summary of the new AOB law is just that: a summary, and this is not meant to exhaustively detail the finer points of the proposed law.  We have attached hereto a copy of the law in its entirety for your edification.