A new Florida law restricts assignments of post-loss benefits from property insurance policies.
Among other things, the law eliminates so-called “one way” attorneys' fee for assignees.
It requires an assignee to give notice prior to filing a lawsuit and to make a presuit demand. The insurer must respond with a presuit settlement offer. The court must compare the difference between the demand and the offer with the judgment obtained and award attorneys' fees based on a formula that provides that if the difference between the judgment obtained by the assignee and the presuit settlement offer is:
- Less than 25 percent of the disputed amount, the insurer is entitled to an award of reasonable attorneys' fees.
- At least 25 percent but less than 50 percent of the disputed amount, no party is entitled to an award of attorneys' fees.
- At least 50 percent of the disputed amount, the assignee is entitled to an award of reasonable attorneys' fees.
The law allows insurers to make available a property insurance policy that prohibits or restricts the assignment of post-loss benefits. If an insurer offers a policy that prohibits or restricts assignments of post-loss benefits, it must offer a policy with the same coverage that does not restrict or prohibit the right to assign benefits. When purchasing a policy that prohibits or restricts assignments of post-loss benefits, the named insured must reject the fully assignable policy. Policies prohibiting or restricting assignment of benefits must be at a lower cost.
The law requires assignees to comply with some of the policyholder's duties under the insurance policy. Insurance policies generally require insureds to cooperate with the claims investigation, sit for examinations under oath by the insurance company, and participate in appraisal. The law applies those duties to the assignees as well. In addition, the law:
- Gives the insured 14 days to rescind the assignment.
- Gives the insured 30 days to rescind the assignment if the assignee has not begun substantial work during that 30 days.
- Requires the assignee to provide a copy of the assignment agreement to the insurance company within three days.
- Limits assignments of benefits to $3,000 or one percent of Coverage A during emergencies.
- Prohibits assignee from charging fees or penalties for mortgage processing, rescission, or cancellation of the agreement, or administrative fees to insureds.
- Limits the ability of assignees to collect payment from insureds.
- Requires insurers to report information about assignments to the Office of Insurance Regulation.
- Provides that Citizens Property Insurance Corporation cannot implement rate changes unless the rate filing reflects projected savings from the bill.
New Subsection 627.7152(10), F.S., is effective immediately and provides that attorneys' fees related to an assignment agreement for post-loss claims arising under a property insurance policy only may be recovered by an assignee pursuant to the formula discussed above. The law otherwise is effective July 1, 2019.
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Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].