Florida Court Thwarts Attempt to Limit an Insured's Right to Post-Loss Assignment

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

The right of a policyholder to assign a post-loss claim has become one the most hotly contested insurance issues in Florida.  Homeowners faced with emergencies that cause devastating losses can receive invaluable benefits from assigning their right to pursue a post-loss claim to a contractor.  However, insurance companies oppose such assignments claiming that contractors artificially inflate claims and take advantage of policyholders under such circumstances.  Although an insurance policy can bar assignment of certain rights or require the permission of the insurance company, the right of an insured to assign their rights and proceeds from post-loss claims is firmly established under Florida law. 

However, insurance companies engaged in business in Florida are currently engaged in an aggressive campaign to change this long-standing legal principle.  A recent appelate decision in the case of Security First Ins. Co. v. State of Florida, Office of Insurance Regulation evidences current efforts by the insurance industry to curtail this well-established right of homeowners.  In this case, the insurer appealed a determination by Florida’s Office of Insurance Regulation (OIR) denying approval of insurance forms including the following provision: “Assignment of this policy or any benefit or post-loss right will not be valid unless we give our written consent.”

The OIR denied the request because the forms violate Florida Statutes §627411(1)(a), 627.411(1)(b) and 627.411(1)(e) and conflicted with Florida law by prohibiting assignment of a post loss claims.  The hearing officer indicated that the forms could not be approved because they were misleading given the language suggested that assignment of post-loss benefits or claims would be contingent on the consent of the insurer despite clearly established Florida law to the contrary.

On appeal, the insurance company contended that the right to assign post-loss claims was detrimental to both insurers and policyholders.  The insurer argued that billings by remediation ccompanies following post-loss assignment of claims by a policyholder were thirty percent higher than such claims that were not based on an assignment of rights.  Post-assignment of claims has permitted a “cottage industry” of contractors and other vendors to submit fraudulent and hyper-inflated claims according to the insurance carrier.  The insurer also argued that policyholders are exploited because they sign away their litigation rights.

The court rejected the insurance company’s position because the court did not have sufficient evidence to consider the insurer’s claims in light of the benefit to an insured being able to obtain immediate remediation of damage, such as the removal of water from a home following a burst pipe.  The court acknowledged a key issue was the public policy of facilitating emergency remediation by policyholders who lack funds to pay for such services in the context of the insurance company’s position about fraudulent and excessive invoices.  Although the court conceded the competing public policy issues were important, the appellate judges also considered the legislature the proper entity to reconcile these conflicting interests.

As a Florida insurance claim law firm, we frequently see homeowners who benefit from the ability to assign their post-loss claim to obtain emergency services.  However, a contract provided by a remediation company that is too expansive in forcing an insured to give up his or her ability to control litigation could be unfair to a homeowner.  If you are considering signing such an assignment of rights, you might want to obtain legal advice to ensure the contract is fair and insulates you from the risk of being on the hook for amounts not paid by the insurer.

If you have experienced damage to your home in a loss, you are invited to contact our law firm to speak to an experienced Florida insurance attorney about your options, including the merits of signing an assignment of rights agreement with a water remediation company.  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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