For over a century, Florida courts have upheld the rule permitting post-loss assignments of benefits (AOBs) to third-party service providers, over insurer objections and despite anti-assignment provisions in policies. This established Florida jurisprudence has come under attack by the insurance industry. Last week, Florida’s Senate Banking & Insurance Committee passed SB 1218, proposed by Sen. Gary Farmer. The bill seeks to address allegations of fraud and abuse in the property insurance context. In addition to implementing a water damage restoration services licensing program, SB 1218 adds a subsection to F.S. 627.422, stating, “a personal lines residential property insurance policy, a commercial residential property insurance policy, or a commercial property insurance policy may not prohibit the post-loss assignment of benefits.” The bill thus clarifies existing law and leaves intact the law that permits assignees—who “stand in the shoes of the insured”—to recover attorney fees pursuant to F.S. 627.428. That statute, in effect since 1959 and having roots in a statute enacted in 1893, permits an insured to recover fees and costs if the insured prevails in a suit against its insurer.
Two competing insurer-backed bills (SB 1038 and HB 1421) have yet to be heard. These bills would, among other limitations, bar assignees from collecting statutory attorney fees and institute a prevailing party fee component. The industry argues AOBs and 627.428 lead unscrupulous contractors and their attorneys to submit fraudulent or inflated claims, increasing premiums. SB 1218 directly addresses the issue by mandating that any 627.428 fees paid by a property insurer, “may not be used to justify a rate or rate change.”
