The Florida Legislature has passed a complete overhaul of property insurance assignment of benefits law. These are big changes and will drastically affect water restoration companies and other businesses that utilize an assignment of benefits in the home insurance context.

The 2019 reforms would seem to have been drafted by the insurance lobby and signed off on by the legislature. Doubtless these reforms will save the insurance industry millions of dollars.

What are the major changes for those involved with assignments of benefits?

• First, the legislation limits assignments of benefits (“AOBs”) for emergency services to $3,000 or 1 percent of Coverage A. Note that the law doesn’t limit how much work can be done or billed for but only what can be done under an AOB.

• Second, the legislation requires that the Assignee (the party receiving the assignment) be subject to appraisal and other duties under the policy such as examinations under oath. This is a direct contradiction to and overrides established case authority that an Assignee does NOT have to submit to examinations under oath. Examinations under oath can take all day to complete and may not be economically feasible for small business owners to submit to for every claim.

• Third, the legislation creates a pre-lawsuit duty on behalf of the Assignee to submit a demand to the insurance carrier – similar to the no-fault or PIP pre-suit demand requirement. However, it goes a step further and changes Florida’s fee-shifting statute based upon the pre-suit demand numbers. If the Assignee fails to obtain over 25% of the demanded amount in litigation, the insurance company will be able to obtain its attorney fees from the Assignee. Attorneys fees in these cases can easily approach $100,000 in heavily litigated cases. Losing one case could easily put a small company out of business!

• Finally, and perhaps most importantly, the legislation allows insurance companies to sell policies which do not allow AOBs at all. This is contrary to current case authority on the subject and obviously something the insurance carrier’s were not happy about. That problem has now been taken care of by legislative effort.

There are other changes but those are the most important as we see them. These changes will change this industry and obviously are the exact changes the insurance industry was looking for.

Now we will see if home insurance rates actually come down or … not.