Tucked away and buried amidst the pages and provisions of many homeowners’ insurance policies is an “anti-assignment” clause forbidding the homeowner from assigning his or her policy to a third party. This provision (which is actually a common provision found in various types of contracts other than insurance contracts) prevents one party from becoming obligated to perform an action or pay a benefit to a third party without the obligated party’s consent. In the context of a homeowners’ insurance contract, an anti-assignment provision would prevent a homeowner from obligating his or her insurance company to pay benefits the insurance company might otherwise owe to the homeowner to a third party with whom the insurance company has no relationship.
Most states enforce “pre-loss” anti-assignment provisions in homeowners’ insurance contracts and refuse to enforce “post-loss” anti-assignment provisions. A Florida appellate court has recently followed the majority trend and ruled that post-loss anti-assignment provisions in homeowners’ insurance contracts will not be enforced (the case is One Call Prop. Servs. v. Security First Ins. Co., 165 So.3d 749 (Fla. 4th DCA 2015)). This allows a homeowner who has suffered a loss and filed a claim that the insurance company is obligated to pay to assign the proceeds of that claim to a third party, effectively requiring the insurance company to pay that third party.
Florida Appellate Court Rules Post-Loss Assignment Clauses Are Not to Be Enforced
In One Call, the homeowner suffered a water-related loss that was covered by the homeowner’s insurance policy. The homeowner contacted a company to remove the water and assigned his rights to the proceeds from his insurance claim to the company as payment. When the insurer refused to pay the company, however, the company sued.
After the trial court dismissed the company’s lawsuit on the grounds that the homeowner’s insurance policy prohibited the post-loss assignment, the appellate court reversed this decision. The appellate court ruled that even where an insurance policy contains an anti-assignment provision, the insured homeowner may still assign a post-loss claim to a third party.
The Difference Between a Pre-Loss Assignment and a Post-Loss Assignment
The appellate court’s decision focused solely on a “post-loss” anti-assignment clause. This type of anti-assignment provision applies once an insurance company has become obligated under the terms of the policy because a covered loss has already been determined to have occurred. This is different from a “pre-loss” anti-assignment provision, which (as the name suggests) prevents a homeowner from assigning the proceeds of a potential policy claim before a covered loss is determined to have occurred.
Why Do Homeowners Need or Want to Assign a Claim to a Third Party?
A home repair bill resulting from a loss that is covered by the homeowner’s insurance policy can easily cost the homeowner hundreds – or even thousands – of dollars. For some homeowners, this is prohibitively expensive. Rather than forego a necessary and typically, emergency repair, or postpone a repair while the homeowner tries to save the requisite funds, assigning an insurance claim to the repair company allows the homeowner to have the repair completed promptly without paying any money out of pocket. The repair company is willing to complete the necessary repairs knowing that it will soon be paid directly by the insurance company.
Miami homeowner insurance claim attorney J.P. Gonzalez-Sirgo is available to assist homeowners in Miami and throughout Florida who are experiencing difficulties in dealing with their homeowner insurance companies. The Law Firm 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.