Reforming the Assignment of Benefits System
Florida lawmakers are debating what to do about rising insurance premiums. The insurance companies (insurers) are arguing that contractors that take an “assignment of benefits” are filing inflated claims, forcing insurers to raise premiums. This tactic of blaming honest restoration professionals for alleged poor claims practices is forcing the legislature to consider the “assignment of benefits” (AOB) process as part of any insurance reform effort.
What Is an “Assignment of Benefits”?
When a home or business owner suffers a loss, they often turn to restoration professionals, also known as AOB contractors, to quickly and efficiently mitigate their damages. Typically, property owners (the insured) can’t wait for a delayed payment from the insurance company to come through before dealing with the damage, yet they can’t afford to hire restoration professional services without those much-needed insurance benefits. To resolve this challenge, instead of requesting direct payment from the insured for their services, AOB contractors hired to repair property damage after a loss often allow the insured, under their insurance policy, to transfer to the restoration professional their right to collect money from their insurance company. This allows the property owners to quickly mitigate their damages (as their policy requires), without laying out thousands of dollars out of their pocket. This transfer of rights from the insured to the restoration professionals is called an assignment of benefits (AOB).
After the AOB is signed and the work completed, instead of the insurance company paying these restoration professionals as the policy requires, they often deny payment or they grossly underpay claims, thereby causing the insurance companies to incur expenses associated with litigation when the restoration company is forced to litigate to recover the monies they are rightfully owed under the policy. The insurers don’t blame their claims practices for their increased costs associated dealing with AOB claims, but rather point the finger at AOB contractors and say they are abusing the system by filing inflated claims.
Rising Premiums Caused by Delay Tactics
Unfortunately, Florida law permits insurance companies to increase policy costs by 10 percent every year, which some companies say they will do to cover the costs incurred due to the increased cost of litigation of AOB claims. For example, Citizens Property Insurance Group’s average policy increased from $2,900 to $3,200 in 2017, and CEO Barry Gilway says that’s not enough to cover the rising costs from water damage claims.
Citizens, for example, in the past several years, has had a standing order to fight any AOB claim in litigation regardless of merit or cost.
Their delay tactic of saying that the homeowner cannot assign their insurance rights without the insurance company’s consent was thwarted by the decision from the 4th DCA.
In One Call Restoration v. Security First insurance, 165 So.3d 749 (2015), the court held that a homeowner has an absolute right to assign their post-loss benefits.
In Florida, the law provides that when an insurance company is sued and the insurance company loses, they must pay the insured’s (or its assigns) attorney’s fees. By Citizens and other insurance companies fighting the AOB process based on poorly thought-out tactics, it has cost these insurance companies millions of dollars in unnecessary attorney’s fees that were incurred by both Plaintiff and Defense firms. Their tactics of fighting AOBs are unfair to the consumers as it has increased their premiums.
Consumers should be able to continue to hold their insurance companies accountable through litigation and should have the right to assign their policy to AOB contractors.
At the Insurance Litigation Group (ILG), our Florida attorneys understand that you can’t afford to wait around while the insurance company engages in delaying and denying tactics. Suing insurance companies on behalf of homeowners and restoration professionals is the only area of law that we focus on.
ILG supports the valuable work of Florida restoration professionals and mitigation companies and provides prompt, dedicated service to see that they are fully paid under their assignment of benefits. Our staff of experienced courtroom attorneys and former public adjusters has a deep understanding of the needs of restoration professionals, the legal issues involved, and the litigation strategies for prompt, successful resolution of insurance disputes.
If you are a restoration professional or mitigation company performing work under an assignment of benefits, let a knowledgeable and experienced attorney advise you of your rights and represent you in any dispute with the insurance company regarding prompt, full payment of policy benefits.
Contact Insurance Litigation Group in Florida at 786-529-0090 for a free consultation or immediate assistance.