{"id":896158,"date":"2019-07-16T14:54:23","date_gmt":"2019-07-16T20:54:23","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=896158"},"modified":"2019-07-16T14:54:30","modified_gmt":"2019-07-16T20:54:30","slug":"floridas-aob-reform-bill-became-effective-july-1-2019-how-does-this-affect-me","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/floridas-aob-reform-bill-became-effective-july-1-2019-how-does-this-affect-me\/","title":{"rendered":"Florida\u2019s AOB Reform Bill Became Effective July 1, 2019: How Does This Affect Me?"},"content":{"rendered":"\n
Beaujeaux de Lapouyade | Property Insurance Coverage Law Blog | July 8, 2019<\/p>\n\n\n\n
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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.<\/p>\n\n\n\n
Assignment of Benefits (\u201cAOB\u201d) 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,\u00a0Assignment of Benefits Contracts are the Hot Topic of Discussion and Legislation in Florida, North Dakota and Elsewhere<\/em>.<\/p>\n\n\n\n
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.<\/p>\n\n\n\n
Florida\u2019s new AOB Reform Bill went into effect on July 1, 2019. Florida Governor Ron DeSantis signed\u00a0House Bill 7065\u00a0on May 23, 2019, which is now Laws of Florida\u00a0Chapter 2019-57\u00a0(\u201cAct\u201d). 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.<\/p>\n\n\n\n
The Florida Office of Insurance Regulation issued\u00a0Informational Memorandum OIR-19-02M<\/em>\u00a0to notify insurers of the passage of the Act, discuss various provisions of the Act, and provide guidance to facilitate implementation.<\/p>\n\n\n\n
Here are some noteworthy provisions of Florida\u2019s newly effective AOB Reform Bill, which are important to know regardless of which team you are on.<\/p>\n\n\n\n
Fee Shifting Switch<\/strong><\/p>\n\n\n\n
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.<\/p>\n\n\n\n
Florida\u2019s one-way fee provision is a vital protection for policyholders under Florida law. In an interview with\u00a0Law360<\/em>,\u00a0Beth A. Vicchioli\u00a0explained,<\/p>\n\n\n\n
The current one-way attorney fee provision was always originally designed to help consumers who don\u2019t have the same financial resources as their insurers to go through litigation.<\/p><\/blockquote>\n\n\n\n
She also noted,<\/p>\n\n\n\n
Once these assignments started popping up then the insurer was no longer in litigation against a consumer, but against another sophisticated commercial company.<\/p><\/blockquote>\n\n\n\n
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.<\/strong><\/em><\/p>\n\n\n\n
The gap between the carrier\u2019s pre-suit settlement offer and the assignee\u2019s pre-suit demand is the \u201cdisputed amount.\u201d 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\u2019s fees. If the judgment obtained is 25% to 49% of the disputed amount, then neither party is entitled to an award of attorney\u2019s fees. If the judgment obtained is 50% or more of the disputed amount, then the assignee is entitled to a reasonable attorney\u2019s fee award.<\/p>\n\n\n\n
Pre-Suit Requirements<\/strong><\/p>\n\n\n\n
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.<\/p>\n\n\n\n
Insurers Required to Offer More Options to Consumers<\/strong><\/p>\n\n\n\n
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.<\/p>\n\n\n\n
Monitoring AOB Reform<\/strong><\/p>\n\n\n\n
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.<\/p>\n\n\n\n
It will be interesting to assess and monitor the impact of the new AOB legislation on insurance regulation.\u00a0Merlin Law Group attorneys\u00a0licensed in the Sunshine State are here to answer questions regarding Florida\u2019s new AOB Reform Bill and its potential impact on businesses, policyholders, and other insurance professionals. It\u2019s time to play ball.<\/p>\n","protected":false},"excerpt":{"rendered":"
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