This is Part II in our two-part blog post discussing assignment of a post-loss claim in the context of securing emergency water remediation services without paying up front. Part I of this blog discussed the factual circumstances of a recent case and the rulings of both the trial and appellate courts. The trial court ruled for the insurer while the appellate court ruled for the insured. Part II of this blog focuses on the court’s analysis of the legal right of an insured to assign a post-loss claim even when the insurance policy has a provision that bars assignment of the contract.
One Call asserted the following on appeal: (1) post-loss assignment of insurance proceeds are valid under Florida law even if the policy contains an anti-assignment clause; (2) the right of payment under a policy accrues at the time of loss; and (3) the loss payment provision has no impact on the assignment of benefits under a policy.
The court observed that under Florida case law, the assignability of an insurance policy was based on the language of the policy, but even an anti-assignment provision does not preclude assignment of a post-loss claim. Further, an insured is not even required to obtain the consent of the insurer before assigning a post-lost claim regardless of a clause in the policy barring assignment. The 4th DCA acknowledged that this long-standing rule dated back to a 1917 Florida Supreme Court decision recognizing that provisions in insurance policies requiring consent to assignment of a policy do not apply to assignment of post-loss claims.
First Security, the insurer, attempted to overcome this argument by claiming the insured impermissibly attempted to assign unaccrued rights under the policy. According to the insurer, the insured had no claim to assign at the time the assignment was executed because the insurance carrier did not yet owe any benefits to the policyholder. Since there were no benefits due and owing when the assignment was executed, no valid assignment of a post-loss claim occurred.
Security First relied on the following language in the policy to support its argument:
“Loss Payment. We will adjust all losses with you. We will pay you unless some other person is named in the policy or is legally entitled to receive payment. Loss will be paid upon the earliest of the following:
a) 20 days after:
1) We receive your written proof of loss and reach a written, executed agreement or settlement with you according to the terms of the written agreement; or
b) 60 days after we receive your written proof of loss and:
- There is an entry of final judgment or, in the case of an appeal from such judgment, within 60 days from and after the affirmance of the same by the appellate court; or
- Written executed mediation settlement with you according to the terms of the written mediation settlement; or
c) Within 90 days after we receive notice of an initial claim “reopened claim” or “supplemental claim” from you, we will pay or deny such claim or a portion of the claim unless the failure to pay such claim or portion of claim is caused by factors beyond our control which reasonably prevent such payment.
The 4th DCA rejected the premise that this loss payment provision served as a bar to payment under the assignment agreement between the insured and One Call, the remediation firm to whom the right to benefits was assigned. The court indicated that the policyholder had the right to assign money or the right to benefits after the loss without regard to whether the “time for payment” had come and gone. The court found that this type of standard loss payment provision does not preclude assignment of a post-loss claim even though payment is not yet due under the terms of the policy. Based on this reasoning, the court held that an assignable right to benefits accrues at the time of loss even if payment is not yet due under the policy loss payment provision.
Although this court ruled in favor of the insured, an assignment of rights by an insured is often disputed by the insurance company. The insurer might claim that the contractor is abusing its legal rights under the policy by performing unnecessary work or overbilling for the cost. If you have questions about whether to sign this type of agreement assigning your legal rights over to a loss mitigation contractor, we invite you to contact us to discuss your rights and options, so you are not stuck covering excessive charges later.
If you have questions about homeowner’s insurance claims, you are invited to contact our law firm to speak to an experienced Miami insurance claim lawyer. 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.