On May 20, 2015, Florida’s Fourth District Court of Appeal issued its long-awaited decisions in three separate cases relating to post-loss assignments of benefits (AOB) under an insurance policy: One Call Property Services Inc. a/a/o William Hughes v. Security First Insurance Company, No. 4D14-424 (Fla. Dist. Ct. App. 4th Dist. May 20, 2015); ASAP Restoration and Construction, Inc. a/a/o Suzanne Casey v. Tower Hill Signature Insurance Co., No. 4D13-4174 (Fla. Dist. Ct. App. 4th Dist. May 20, 2015) and Emergency Services 24, Inc. a/a/o Jay Meiselman v. United Property & Casualty Ins. Co., Nos. 4D14-576 & 4D14-3320 (Fla. Dist. Ct. App. 4th Dist. May 20, 2015). In each case, a water mitigation company appealed a final order dismissing its complaint against an insurer, filed as assignee of an insured on a homeowners’ policy. The court reversed the lower court’s decisions across-the-board, finding that the trial court erred in holding that the anti-assignment clause and the loss payment provision under the policy precluded the assignment.
In One Call Property Services Inc. a/a/o William Hughes v. Security First Insurance Company, the 4th DCA concluded that an assignable right to benefits accrues on the date of the loss, even though payment is not yet due under the loss payment clause. The court declined to interpret the loss payment clause as affecting the validity of a post-loss assignment, finding that it merely addresses the timing of the payment and contemplates that a lawsuit could occur before payment is due. The court also held that an insured can assign an unaccrued right to benefits under the policy, so long as the assignment took place after the loss. Finally, the court rejected the argument that the assignment attempts to assign a contractual “duty to adjust” from the insured to a third party, holding that “as long as the insured complies with all policy conditions, a third-party assignee may recover benefits on a covered loss.” Relying on its decision in One Call, the court also reversed the lower court’s holdings in ASAP Restoration and Construction, Inc. a/a/o Suzanne Casey v. Tower Hill Signature Insurance Co. and Emergency Services 24, Inc. a/a/o Jay Meiselman v. United Property & Casualty Ins. Co.
The One Call Court acknowledged two competing public policy considerations: the insurance industry’s argument that assignments of benefits allow contractors to unilaterally set the value of a claim and demand payment, and the contractors’ argument that assignments allow homeowners to hire contractors for emergency repairs immediately after a loss. The court asserted, however, that it was not in a position to evaluate these arguments and deferred to the legislature as the more appropriate body to investigate and undertake comprehensive reforms if studies establish that such assignments are inviting fraud and abuse.
The 4th DCA also declined to reach the insurers’ other challenges, including whether the assignment violates the public adjuster statute or the statute governing insurable interests, or whether the assignment is a partial assignment that cannot be enforced against the insurer without its consent. The court instructed the trial courts to address these issues of law in the first instance. For the trial court’s benefit on remand, the court referenced the Fifth District Court of Appeal’s recent decision in Accident Cleaners, Inc. v. Universal Ins. Co., 2015 WL 1609973, 2015 Fla. App. LEXIS 5199, 40 Fla. L. Weekly D 862 (Fla. Dist. Ct. App. 5th Dist. Apr. 10, 2015), where the 5th DCA held that a post-loss assignee is not required to have an insurable interest at the time of loss, explaining that the legislature, in enacting Section 627.405, Florida Statutes, “did not state that it was displacing well-settled common law of (1) the free assignability of contractual rights to recover or (2) the inability for insurers to restrict post-loss assignments.”
Thus, the validity of assignments of benefits under a homeowners insurance policy, at present, is back before the trial courts for consideration, based on the 4th DCA’s refusal to fully address the issues raised by such assignments. In the meantime, the proliferation of multiple lawsuits arising out of the same claim has been allowed to continue.