This is the second installment of our two-part blog post exposing the misleading and invalid contentions promulgated by the insurance industry to oppose the right of an insured to effect a post-loss assignment of benefits. The power of an insured to assign a right to proceeds or a claim after a peril causes damage to a home is extremely valuable for policyholders. While issues might arise about the appropriateness of the amount billed for repairs, an assignment of benefits means the insurer will dispute the invoice rather than a policyholder. This result constitutes sound public policy because the loss mitigation company and insurer can negotiate settlement of an invoice on more equal ground than an individual homeowner faced with the need for emergency services following a disaster.
Fallacy #5: Loss mitigation service agreements that authorize an assignment of benefits violate Florida’s statute governing public adjusting of claims.
The Florida statute that governs public adjusters requires individuals who assist policyholders to be regulated and certified by the state. Public adjusters negotiate with insurance carriers on behalf of policyholders regarding the issue of coverage and the value of a loss. A contractor under an assignment of benefits agreement does not negotiate for the homeowner regarding the amounts the homeowner is entitled to receive for damage to the home, personal property within the residence, and/or additional living expenses. The contractor represents its own interest in obtaining its fee limited to the services the company performed for the insured. In other words, the contractor’s dealings with the insurer are limited to its own bill not the value of the insured’s claim.
Fallacy #6: It is unfair to permit a post-loss assignment of benefits because it violates the non-assignment clause in homeowner’s policies.
When a contractor and an insured engage in a post-loss assignment of benefits arrangement, the actual insurance policy is not being assigned to the company that performs repair work. The only right transferred to the contractor involves payment for services actually performed. All that is assigned is post-loss money or benefits, so the insurance company faces no unanticipated risk because the damage has already occurred. The fairness of the relationship is rooted in the insured avoiding the need to wait weeks or months for payment of a claim. The ability to immediately assign proceeds from a loss also prevents further damage that might occur if the insured lacked funds to pay for services until the claim has been resolved.
Fallacy #7: The language in an assignment of benefits clause might deprive the homeowner of control over any aspect of the claim.
While the language of contracts used by some loss mitigation companies might seem broad enough to permit this outcome, state law prohibits this result. Florida law only permits an assignment of benefits provision to transfer to a contractor the right to payment for the services the contractor actually provides to the insured. As the Florida 13th Circuit Court of Appeals explained in United Automobile Ins. Co. v. Orozco, “[i]t is a given that an effective assignment would convey the right to sue only for services the assignee provides.” In other words, contractors do not have the right to effect an assignment of the ENTIRE claim despite the language used in the contract between the insured and the service provider.
Fallacy #8: Service provider contracts that permit an assignment of benefits violate Florida law because contractors have no “insurable interest” in the subject property.
This contention made by insurance companies is based on Florida Statutes §627.405, which requires an insured have an interest in the property covered under a policy. This commonsense rule prohibits an individual from obtaining an insurance policy covering a neighbor’s home or a friend’s automobile. This argument advanced by insurers is a complete red herring because the insured has an interest in the subject property. The insured is simply assigning his or her right to post-loss payment after the damage has occurred. As long as the insured has an interest in the subject property, the fact the contractor does not have an ownership interest is irrelevant.
If you have questions about executing an assignment of benefits or other insurance claims issues, you are invited to contact our law firm to speak to an experienced Florida insurance attorney about your options. 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.