Emergency Water Loss Remediation Services: Assignment of Post-Loss Claim Rights [Part I]

J.P. Gonzalez-Sirgo
Founder of J.P. Gonzalez-Sirgo, P.A.

When a broken pipe in the kitchen or a defective hot water heater floods your living room, time is of the essence in mitigating the damage.  Failure to properly remove the water can cause long-term structural damage, mold hazards and other problems.  However, water damage remediation efforts can make the problem worse if qualified professionals do not perform these measures. 

When a homeowner lacks the hundreds or thousands of dollars that might be needed to pay for a water remediation service, one available option is the assignment of insurance benefits to a water remediation company. This approach permits the insured to get the damage handled immediately without the need to pay the cost (or full cost) or to wait for the insurer to adjust and pay the claim. 

This two-part blog series explains a policyholder’s right to assign their claim following a covered loss in the context of a recent decision by the Florida 4th District Court of Appeals.  In Part I of this blog, we review the factual background of the case and rulings by both the trial court and the 4th DCA.  Part II of this blog focuses on the court’s analysis of an insured’s right to assign a post-loss claim despite the presence of a non-assignment clause in the insurance policy.

The strategy of assigning an insurance claim only works if contractors that do this type of repair work are comfortable that they will be entitled to receive payment under the insurance policy.  The validity of this type of transfer of the right to collect benefits under the insurance policy (referred to as an “assignment” of rights) was recently challenged in the context of an assignment after a loss.  The insurance company denied any legal obligation to pay the contractor because the insurance contract contained an “anti-assignment clause.”  According to the insurance company, the provision precluding assignment of the policy along with the payment provision made the assignment invalid, which barred the remediation company from benefits under the policy.

In the Florida 4th District Court of Appeals case, One Call Property Serv. Inc. v. Security First Ins. Co., the property owner’s home was damaged after an incident resulting in an accidental release of water within the property.  One Call agreed to perform the services based on the insured’s execution of an agreement that provided in relevant part: “I, the Owner, hereby assign any and all insurance rights, benefits, and proceeds under any applicable insurance policy to One Call . . . including any cause of action which exist or may exist in the future.”  One Call alleged compliance with all “conditions precedent” in its complaint for breach of contract against Security First.  Security First moved for summary judgment based on a lack of standing to pursue the lawsuit and failure to state a cause of action (legal claim) because the assignment of rights and benefits under the insurance policy was not valid. 

The trial court sided with Security First based on the contention that “the no assignment provision of the policy when read in conjunction with the loss payment provision of the policy precludes the plaintiff, as an assignee, from bringing a lawsuit to determine the amount of the loss or . . . what is due under the policy.”  The trial court granted dismissal of the complaint based on this argument, but the appellate court reversed.

The reasoning behind the 4th DCA’s decision in favor of the insured is discussed in Part II of this blog post.  If you have questions about homeowner’s insurance claims, you are invited to contact our law firm to speak to an experienced Miami insurance claims attorney.  My law firm represents policyholders in claims disputes in Miami and throughout Florida. The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095 or Toll Free 1-866-71-CLAIM.

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