Florida property owners, listen up: The rules have changed on how you can get your home repaired after a hurricane or other natural disaster by letting a contractor deal directly with your insurance company.
The legislation, CS/HB 7065, is the biggest change to Florida law on assignment of insurance benefits in years.
Whenever Florida is struck by a hurricane or other natural disaster, contractors flock to the area, going door to door and offering to start immediate repairs on homes and businesses if the property owner will sign over their insurance benefits to the contractor.
These “assignment of benefits” contracts, also known as AOB, can result in a high-quality repair at a fair price by a licensed, insured contractor.
But in recent years, insurers have been pressuring lawmakers to rein in abuses of these AOB contracts, especially lawsuits arising from disputes between contractors and insurers over how much to pay for repairs.
In early 2019, Florida insurance regulators testified to the legislature that that such lawsuits were skyrocketing, driving up insurance costs and threatening to drive some insurers out of the Florida market.
Meanwhile, property owners have complained that insurers take too long to inspect property, approve repairs or authorize immediate temporary repairs to prevent future damage. The new law sets new time limits for insurers, property owners and contractors.
Here are some of the major provisions of the new law:
- If you sign an AOB agreement with a contractor, the contractor (called an “assignee” in the new law) must provide your insurer with an itemized, per-unit cost estimate of the work to be done. The contractor also must provide the insurer a copy of the AOB agreement within three days.
- Often, roof damage to a home or business can result in water leaks, which can later turn into major mold and mildew problems. Homeowners sometimes agree to sign over benefits to contractors for a quick temporary repair to head off future loss. The new law limits these temporary repair agreements to $3000 or 1 percent of the coverage limit on such storm damage in your policy, whichever is greater.
- If a dispute arises between the insurer and the assignee over how much of the loss will be covered, the assignee has to notify the insurer of intent to file a lawsuit over the dispute at least 10 days before the lawsuit is filed. Insurers have 10 days to respond, but insurers can get extra time if an emergency has been declared in your area because of a storm.
- If your contractor sues your insurer to force them to pay more than they’re offering for the repair, and the final judgment in the lawsuit is up to 25 percent more than the insurer’s initial offer, your insurance company now will have the right to collect their attorney’s fees from the assignee. If the final judgment in a lawsuit is between 25 and 50 percent higher than the insurer’s initial offer, neither side can recover attorney’s fees. If the insurer’s initial offer was more than 50 percent lower than the final judgment in a lawsuit, the assignee can recover attorney’s fees from the insurer. This provision was meant to discourage lawsuits in cases where the disputed portion of the insurance settlement is relatively minor.
However, if an insurer doesn’t inspect the property or authorize repairs within seven days of notification of a loss, the insurer must give up its right to recover attorney’s fees from a resulting lawsuit.
- Previously, Florida courts had held that you had a right to sign over your insurance benefits to a contractor after a loss. Under the new law, insurers now can sell you an insurance policy that doesn’t allow you to assign your benefits to a contractor, although the insurer also must offer you a policy that does allow AOB contracts – possibly at a higher cost.
PS: Here's a HUGE tip we learned during a Facebook Live with the Tasha Carter of CFO Jimmy Patronis's Office: The document you sign that *is* the Assignment of Benefit does NOT have to state Assignment of Benefit at the top ... and likely won't.
Read the legislature’s analysis of the bill’s provisions here.