While this blog generally focuses on the failure of insurance companies to comply with contractual obligations or to act in good faith when adjusting and paying a claim, there are ancillary legal issues that can impact an insurance claim. Homeowners often arrange to have their property inspected and the work performed. When they do not read the paperwork carefully before signing documents presented by those performing repairs, the financial consequences can be devastating. One such issue that is unfamiliar to many policyholders involves a contractual assignment of rights.
If you have water damage in your home because a water pipe burst, you might call a plumber to repair the damaged pipe. The plumber might be able to repair the failed pipe, but you need a water mitigation specialist to repair damage to carpet, drywall, flooring and cabinetry. A water mitigation contractor also can take steps to mitigate mold and eradicate mold that has already flourished.
When your insurance company drags its feet in adjusting and paying your claim, you might be hard pressed for the funds to have the work done. Many water mitigation companies and other contractors will ask policyholders to sign a contract that includes an “assignment of benefit” clause. Although the precise language of such clauses will vary, they typically contain language to the effect “I assign and transfer all causes of action, legal rights or insurance benefits” to the company that is performing the work.
Policyholders who do not carefully read contracts with damage remediation companies or fail to understand the terms can significantly compromise their rights or damage their insurance claim. This type of provision will empower the mitigation contractor with all the legal rights and remedies associated with the insurance claim, which includes insurance payments. When this happens, the insured will typically lose control of the claim process.
While policyholders might wish to get approval for the cost of repairs prior to entering into a contract for the repairs, sometimes an insured will not wait for such an approval. If the insured enters into a contract with a water mitigation company prior to such approval, the insured can experience serious financial problems. The amount charged to the insurance company might not be consistent with the work undertaken. When the insurer does not pay the contractor according to the amounts of the contract, the water mitigation company might file a contractor’s lien, which theoretically could lead to foreclosure. The bottom line is that you should never sign anything until you have carefully reviewed the contract. If there are terms that you do not understand or you are unsure of your rights and remedies, my law firm can provide experienced legal advice.
If you have questions about Florida property damage claims, you are welcome to contact my Florida insurance claims dispute law firm. 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.