11 Nov Assignment of Insurance Benefits: New Law Creates Strict Standards for Property Insurance AOB Agreements

It’s been a few months since Florida’s new assignment of benefits (AOB) laws went into effect. AOBs generally authorize vendors (contractors, water remediation companies, etc.) to collect payment for their work directly from the owner’s property insurance company. AOBs are commonly included in contracts and can be easily abused by unscrupulous contractors. Since property losses often require immediate attention, home and business owners often had no choice but to sign the AOB and hope for the best. But that’s no longer the case.

As of July 1, 2019, an assignment agreement for services to protect, repair, restore or replace property or to prevent further damage after a property loss MUST:

• be in writing and signed by the parties;
• give the property owner at least 14 days to cancel the contract without penalty or fee;
• be furnished to the insurance company within 3 business days after being signed or the date on which work begins, whichever is earlier;
• include a written, itemized, per-unit cost estimate of the services to be performed;
• include the statutorily required notice of rights in conspicuous uppercase and boldfaced type; and
• require the vendor to indemnify and hold the property owner harmless from all liabilities, damages, losses and costs if the property insurance policy prohibits AOBs.

An assignment agreement may NOT contain:

• a fee or penalty for cancelling or rescinding the contract;
• a check or mortgage processing fee; or
• an administrative fee.

If a contract fails to satisfy these requirements, the AOB is invalid and unenforceable. It’s still too soon to know the impact these reforms may have on home and business owners in need of urgent repair or loss mitigation services following a property loss. We’ll just have to wait and see. In the meantime, please contact us if you have any questions about obtaining adequate property insurance under Florida’s new AOB laws