Insured’s Right to Assign Post-Loss Benefits Affirmed Yet Again Florida's 2nd DCA Finds in Favor of the Insured

Last year, Florida’s Fourth District Court of Appeals affirmed the long standing principle that an insured may freely assign post-loss benefits under a policy of insurance. The court rejected the insurance company’s multiple arguments against the assignment, and held that, provided the insured complied with the applicable policy provisions, a third party assignee could rightly recover benefits under a covered loss. One Call Property Services, Inc. v. Security First Insurance Company, No. 4D14-424 (Fla. 4th DCA 2015). The court declined to consider the insurance company’s argument that the assignment violated the public adjuster statute or the statute governing insurable interests.

Florida’s Second DCA issued an opinion just this week in line with the Fourth DCA, and which goes a step further. In the case of Bioscience W., Inc. v. Gulfstream Prop. & Cas. Ins. Co., No. 2D14-3946 (Fla. 2nd DCA, 2016) the insured’s home was damaged by a water loss. She hired Bioscience to perform emergency water removal and construction services, and signed an assignment of benefits so that Bioscience could immediately complete the work and seek payment from her carrier, Gulfstream. After Gulfstream denied the claim, Bioscience filed suit. The circuit court granted summary judgment in favor of Gulfstream due to the fact that the insurance policy contained a clause prohibiting assignment of the policy without Gulfstream’s permission.

On appeal, the Second DCA overturned the circuit court and agreed with Bioscience’s argument that the plain language of the policy merely prohibited the insured from assigning the entire policy without the insurer’s consent, but that it did not prohibit an insured from unilaterally assigning a benefit derived from the policy.

Gulfstream also attempted to argue that the assignment of benefits violated Florida’ public adjuster statute, § 626.854(16), claiming the assignment impermissibly allowed the contractor to adjust the claim. The court disagreed, and found the record reflected that Bioscience merely provided emergency water removal services to the insured’s home, but did not determine the amount due under the policy. Citing Fla. Stat. § 626.854(16), the court held that Bioscience was permitted to “discuss or explain a bid for construction or repair of covered property with the residential property owner …” if the contractor “is doing so for the usual and customary fees applicable to the work to be performed as stated in the contract between the contractor and the insured.”

Finally, Gulfstream brought up the “insurable interest” argument. It contended that the assignment violated Fla. Stat. § 627.405, which mandates that no contract for insurance may be had unless for the benefit of persons having an insurable interest at the time of loss. Since Bioscience did not have an insurable interest at the time of the loss, Gulfstream argued, it could not maintain a claim for benefits. While the court agreed that Bioscience did not have an insurable interest at the time of the loss, the insured did, and then assigned the vested insurable interest to Bioscience, allowing it to step into her shoes. Thus, the assignment did not violate the statute.

The court even went so far as to suppose a scenarios where an insurer may attempt to exclude post-loss assignments altogether. It roundly rejected the idea, stating, “Even if an insurance policy contained a specific, articulate provision precluding an insured’s post-loss assignments of benefits without the insurer’s consent, Florida case law yields deep-rooted support for the conclusion that post-loss assignments do not require an insurer’s consent.”

The court rested on Florida’s long established legal precedent set by the Florida Supreme Court, which held that anti-assignment provisions do not apply to assignments after a loss. See W. Fla. Grocery Co. v. Teutonia Fire Ins. Co., 77 So. 209, 210-11 (Fla. 1917).

Unlike the Fourth DCA before it, the Second DCA weighed in on the public policy concerns. Namely, it found no merit in Gulfstream’s argument that post-loss assignments may allow contractors to influence the adjustment process. It also stated that it would be “imprudent to place insured parties in the untenable position of waiting for the insurance company to assess damages any time a loss occurs. Repairing a home after an unexpected loss event is often a time-sensitive procedure. An insured simply cannot afford to wait for an insurance claim to be adjusted to address that loss, and insurance benefits represent the most ready means of paying for post-loss emergency repairs.”

This ruling marks yet another blow to the insurance industry’s constant attempts to stop their insureds from assigning insurance benefits in order to obtain speedy and often necessary services. Individuals and businesses can rest easier knowing they can still get the help they need without having to sit around and wait for their insurance company to accept coverage and adjust a claim. Perhaps if the insurance companies spent as much time, money and effort actually assisting their insureds, and less time fighting with them, they would not have created a need for the assignment of benefits in the first place.

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