Q: I recently had water leak into my home and the dry out company wanted me to sign a document assigning my insurance benefits to it. I declined but can you explain what an assignment of benefits agreement is?
R.S., Vero Beach
A: When a person assigns property insurance benefits to a company, they are allowing the company to “step into the shoes” of the policy holder/homeowner. This allows the company to negotiate the amount of the insurance claim and even sue the insurance company. Typically, the assignment of benefits contract allows the company to retain all the insurance proceeds as payment for its services. This type of agreement over the years has created a cottage industry for lawyers and contractors to sue insurance companies. However, after several attempts by the legislature to reign in this problem, a law was passed as of July 1, 2019.
Florida Statute 627.7152 and 627.7152 now requires an assignment of benefits contract to provide that it may be cancelled by the assignor within 14 days of execution; at least 30 days after the date work is to commence pursuant to the agreement if work has not been substantially performed by assignee/contractor; or at least 30 days after execution of agreement if the agreement contains no start date and substantial work has not been performed. It also requires pre-suit negotiation between assignee/contractor and insurer and provides for prevailing party attorney fees for both parties in any litigation. The assignee/contractor must also keep and provide detail records supporting cost of work/claim. Requires insurer to inspect property after demand is made or waive its right to attorney fees. Allows insurer to provide a policy that does not allow assignment of benefits if the insurer also offers a policy that does allows assignment of benefits. The restricted policy must provide same the coverage at a lower cost than the unrestricted policy. It is expected that the use of assignment of benefits contracts will become much less common.
Richard D. DeBoest, II, Esq. is co-founder and shareholder of the Law firm Goede, Adamczyk, DeBoest & Cross, PLLC. T o ask questions about your issues for future columns, send your inquiry to: email@example.com. The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this article does not create an attorney-client relationship between the reader and Goede, Adamczyk, DeBoest & Cross, PLLC or any of our attorneys. Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein. The hiring of an attorney is a decision that should not be based solely on advertisements or this column.