Over the last several years, a crisis has engulfed Florida’s insurance market and threatened to spread nationwide. South Florida has been the epicenter for the proliferation of a cottage industry led by water mitigation and restoration contractors focused on gouging insurance companies and taking advantage of innocent policyholders. A select group of these vendors are charging well beyond usual and customary fees for services rendered and adding made-up expenses, such as “mortgage processing” and “check processing” fees. Adding insult to injury, these vendors required policyholders to sign an assignment of benefits, or AOB, depriving them of their right to potentially take legal action against their insurance company and requiring that insurance claim proceeds be paid directly to the contractor—even under circumstances where the work was not performed or was substandard. These agreements often contain a power of attorney that allows the contractor to negotiate directly with the insurance company and file suit in the name of the insured.

The Florida Legislature has taken action to end these AOB abuses with wide-sweeping reform expected to be signed into law by Gov. Ron DeSantis. This legislation will not only curtail the manner in which contractors sign up policyholders and submit their bills to insurance companies, but will also dictate how disputes are resolved both pre-litigation and during a lawsuit.