In the state of Florida, insurance is big business and policyholders have often been on the short end of the stick when it comes to having their rights protected by all three branches of government. After all, it’s usually one policyholder up against a team of attorneys working for the insurance company.
More bad news came last summer when the insurance companies essentially passed a new insurance reform bill that was clothed in the mantra that they were going to better protect policyholders and decrease policy premiums. It went into effect on July 1, 2019. The new Assignment of Benefits (AOB) reform created two new sections in Chapter 627 of the Florida Statutes. Florida Statute §627.7152 and Florida Statute §627.7153 regulate these assignment agreements (also known as AOB) as well as expressly authorize an insurance company to prohibit an insured from assigning their post-loss benefits if certain conditions are met.
What is an AOB?
An Assignment of Benefits is an agreement that transfers the right to receive certain money or benefits under an insurance policy to a third party. For example, a signed AOB could transfer certain rights to a restoration or mitigation company who cleans up water in your home after a failed plumbing pipe floods the property. Here is an overview of some key features of the law:
- An AOB must contain a written, itemized, per-unit cost estimate of the services that will be performed by the third-party contractor. Those costs must only relate to the project at hand.
- There must be a provision in 18-point font that allows the assignor to rescind the AOB agreement without penalty or fee by submitting a written notice within 14 days of signing the original agreement. Additional timelines apply to other contracted work scenarios as well.
- Insurance policies can now completely exclude the policyholder’s right to execute AOBs, as long as the insurance company follows particular procedural steps to accomplish this.
- The AOB reform revises Florida Statute §627.428 and one-way attorney’s fees for a contractor using an AOB. It is important to note that this AOB reform does not apply for surplus lines and Florida Statute §626.9373.
- The law does not apply to surplus line insurance companies.
What Happens When You Sign an AOB?
When you sign an AOB, you, as the policyholder, are releasing certain rights related to the insurance claims process to a third party. Below are important things to note about signing an AOB:
- Upon signing, you are handing over certain rights and benefits of your insurance policy to a third party.
- Depending on the terms and language in the AOB, the third party may be able to endorse checks on your behalf.
- Depending on the terms and language in the AOB, the insurance company may only be permitted to communicate directly with the third party and you may lose all rights to the insurance claim, including the right to mediate the claim, or to make any decisions regarding the claim, including repairs.
- Upon signing an AOB, the third party may be able to file a lawsuit against your insurance company.
Before signing an AOB, please get in touch with us at Silverberg|Brito, PLLC. Assignment of benefits can be far from straight-forward, and insurance policies can also differ significantly. Our experienced team of lawyers has been working with policyholders and restoration companies to navigate the AOB reform and make sure everyone can move forward with their lives as quickly as possible after any damage to their property.