![\"Picture](\"http:\/\/propertycasualtyfocus.com\/wp-content\/uploads\/2015\/06\/czech-flood.jpg\" "\\"Florida")
Many property insurance policies contain terms that prohibit assignment, but Florida law has long deemed those terms inoperative once a loss has occurred.\u00a0 E.g.<\/em>, W. Fla. Grocery Co. v. Teutonia Fire Ins. Co<\/em>., 74 Fla. 220 (Fla. 1917).\u00a0 As a result, contractors who repair or remediate damaged property increasingly offer to accept assignments from policyholders in lieu of payment\u2014a practice that gives them greater leverage in setting prices, because it enables them to back their demands with threatened suits for extra-contractual damages.\u00a0 Recently, two Florida insurers tried to disrupt this routine, arguing that a claim for a property loss may be assigned only after it has become payable<\/em><\/strong>.\u00a0 Last month, in One Call Property Servs. Inc. v. Security First Ins. Co.<\/em>, No. 4D14-424 (Fla. 4th DCA May 20, 2015)<\/a>, and in Emergency Services 24, Inc. v. United Property & Cas. Ins. Co.<\/em>, No. 4D14-576 (Fla. 4th DCA May 20, 2015)<\/a>, that argument washed out.<\/p>\nNothing Will Come of Nothing<\/h2>\n
The insurers in the two cases, Security First and United, both asserted that the anti-assignment terms of the relevant homeowners\u2019 policies had to be read in conjunction with the \u201cLoss Payment\u201d provisions\u2014which governed when, and under what circumstances, any \u201cLoss\u201d would be paid.\u00a0 Under those provisions, the insurers were not required to pay a claim until after it had either settled with the policyholder or received written proof of loss.\u00a0 Thus, although the policyholders had assigned their claims after the Loss, they also did so before<\/em><\/strong> the date on which the loss was due to be paid<\/em><\/strong>\u2014that is, before the policyholders\u2019 right to receive payment had accrued.\u00a0 In the words of both insurers, this meant \u201cthere was nothing for [the Insureds] to assign<\/strong>.\u201d<\/p>\n This argument was built on several premises.\u00a0 One was that the policyholders\u2019 rights under the policy were contingent on certain \u201cpost-loss duties\u201d\u2013such as the submission of a proof of loss.\u00a0 In an apparent reference to the language of the Loss Payment clauses\u2014which stated, \u201cWe will adjust all losses with you<\/em>\u201c\u2014Security First called these duties \u201cthe Insured\u2019s<\/em> duty to adjust the loss with<\/em> SECURITY FIRST<\/strong>,\u201d and it maintained that they could not be delegated.\u00a0 (United\u2019s argument cited the insureds\u2019 \u201cduties of adjustment<\/strong>.\u201d)<\/p>\n A second premise related to public policy.\u00a0 The insurers noted that the rule allowing post-loss assignments is anexception<\/em> to the general rule enforcing anti-assignment provisions in contracts.\u00a0 According to the insurers, \u201cThe justification behind this exception is that there is no effect on the rights of the insurer or the risk it undertook to insure.\u201d\u00a0 That justification is not present, they argued, if the price of covered repairs has not yet been determined:<\/p>\n It does not affect an insurer\u2019s rights or the risk undertaken to allow an insured to assign an accrued<\/em><\/strong> right to payment[,] because [in that situation] the assignee cannot increase the benefit proceeds through inflated or fraudulent billing<\/strong>. .. However, [the assignee contractor\u2019s] ability to influence the claim \u2026 clearly increases the risk undertaken due to the inherent conflict of interest \u2026 .<\/p><\/blockquote>\n If assignments such as the one in the instant case are permitted, insurers would be forced to assume risks far beyond what was bargained-for \u2026 . The purpose of insurance is to restore an insured to their pre-loss condition [sic], not to provide profit on such loss<\/em>, as this would increase moral hazard and undermine the entire concept of insurance<\/strong>.<\/p><\/blockquote>\n Each insurer made these arguments in the context of a state-court suit for breach of contract, brought by the contractor\/assignee of insureds who had suffered losses in what one insurer called a \u201cwater event.\u201d\u00a0 The trial courts accepted these arguments, granting Security First\u2019s motion to dismiss and United\u2019s motion for summary judgment.\u00a0 The contractors appealed.<\/p>\n The Court of Appeal addressed these arguments in its opinion in the One Call<\/em> case, and it made short work of them.<\/p>\n The court flatly rejected the suggestion that an actionable right had not accrued before the assignment:<\/p>\n The loss payment clause merely addresses the timing of the payment and expressly contemplates that a lawsuit could occur before<\/em><\/strong> payment is due.\u00a0 \u2026 We therefore conclude that an assignable right to benefits accrues on the date of the loss<\/strong>, even though payment is not yet due \u2026 .<\/p><\/blockquote>\n It also found that an insured has no \u201cduty to adjust\u201d that could be improperly delegated, because \u201c[a]n insured \u2026 does not \u2018adjust\u2019 losses.\u201d\u00a0 In particular, the court found,<\/p>\n An insured does not determine the amount that the insurer will pay to cover the loss \u2026 .<\/p><\/blockquote>\n Although the last point in the court\u2019s opinion seemed to challenge one of the premises of the insurers\u2019 public policy argument, the court went on to declare that it is not the place of the judiciary to solve the moral hazard problem they identified:<\/p>\nCreatio Ex Nihilo<\/em><\/h2>\n
Thanks For Nothing<\/h2>\n