Assignments Of Benefits (“Aobs”) Remain A Hotly Contested Issue In The State Of Florida
Assignments of benefits (“AOBs”) remain a hotly contested issue in the state of Florida. Florida Statute §627.7152 governs agreements regarding assignment of insurance benefits under a residential or commercial property insurance policy and applies to assignment agreements executed on or after July 1, 2019. Fla. Stat. §627.7152(2)(a) provides in part:
(2)(a) An assignment agreement must:
1. Be in writing and executed by and between the assignor and the assignee.
2. Contain a provision that allows the assignor to rescind the assignment agreement without a penalty or fee by submitting a written notice of rescission signed by the assignor to the assignee within 14 days after the execution of the agreement, at least 30 days after the date work on the property is scheduled to commence if the assignee has not substantially performed, or at least 30 days after the execution of the agreement if the agreement does not contain a commencement date and the assignee has not begun substantial work on the property.
3. Contain a provision requiring the assignee to provide a copy of the executed assignment agreement to the insurer within 3 business days after the date on which the assignment agreement is executed or the date on which work begins, whichever is earlier.
4. Contain a written, itemized, per-unit cost estimate of the services to be performed by the assignee.
5. Relate only to work to be performed by the assignee for services to protect, repair, restore, or replace a dwelling or structure or to mitigate against further damage to such property.
6. Contain the following notice in 18-point uppercase and boldfaced type:
YOU ARE AGREEING TO GIVE UP CERTAIN RIGHTS YOU HAVE UNDER YOUR INSURANCE POLICY TO A THIRD PARTY, WHICH MAY RESULT IN LITIGATION AGAINST YOUR INSURER. PLEASE READ AND UNDERSTAND THIS DOCUMENT BEFORE SIGNING IT. YOU HAVE THE RIGHT TO CANCEL THIS AGREEMENT WITHOUT PENALTY WITHIN 14 DAYS AFTER THE DATE THIS AGREEMENT IS EXECUTED, AT LEAST 30 DAYS AFTER THE DATE WORK ON THE PROPERTY IS SCHEDULED TO COMMENCE IF THE ASSIGNEE HAS NOT SUBSTANTIALLY PERFORMED, OR AT LEAST 30 DAYS AFTER THE EXECUTION OF THE AGREEMENT IF THE AGREEMENT DOES NOT CONTAIN A COMMENCEMENT DATE AND THE ASSIGNEE HAS NOT BEGUN SUBSTANTIAL WORK ON THE PROPERTY. HOWEVER, YOU ARE OBLIGATED FOR PAYMENT OF ANY CONTRACTED WORK PERFORMED BEFORE THE AGREEMENT IS RESCINDED. THIS AGREEMENT DOES NOT CHANGE YOUR OBLIGATION TO PERFORM THE DUTIES REQUIRED UNDER YOUR PROPERTY INSURANCE POLICY.
The assignment agreement is invalid if it does not strictly comply with the provisions of §627.7152. One important provision contained in (2)(a)(4) is that there must be a written, itemized, per-unit cost estimate of the services to be performed by the assignee – this requirement is often disregarded by the assignee in favor of submitting an invoice which contains a total amount invoiced without more. Another provision contained in (2)(a)(3) requires that the executed assignment agreement must be provided to the insurer via delivery specific by the statute within three (3) business days after the date on which the assignment agreement is executed or the date on which work begins, whichever is earlier. Failure to do so within the timeframe specific results in an invalid assignment agreement. These are two provisions for which non-compliance can form the basis of a motion for summary disposition or motion for summary judgment and result in a judgment in favor of the insurer.
We continue to heavily litigate AOB issues in both the residential and auto glass context and fight against wrongful use of AOBs. We are ready and willing to assist with these and other insurance-related issues.
Amy Lee McConnell, Esq.
Associate Attorney
Scarborough Attorneys