Tag: florida assignment of benefits

Florida’s AOB Reform Prompts Citizens to Update Homeowners’ Policies

Floridians insured by Citizens Property Insurance Corporation will see new policy forms next year. Citizens updated its homeowners and other personal lines property insurance policies to reflect Florida’s new assignment of benefits (AOB) laws. These updates will be incorporated into Citizens’ policies with effective dates on or after February 1, 2020.

AOBs, which are commonly used by homeowners after suffering a property loss, generally authorize vendors (contractors, water remediation companies, etc.) to collect payment for services directly from the owner’s property insurance company. In 2019, Florida’s laws were changed to stop the abuse of post-loss AOBs by strictly regulating their use.

In light of these new statutory requirements, Citizens made a number of AOB-related changes to its policy forms. For example, the updated policies include the following AOB-specific definitions.

  • An “assignment agreement” is any instrument which assigns post-loss benefits under a residential property insurance policy to a person providing services to protect, repair, restore, or replace property or to mitigate against further property damage.
  • An “assignor” is the person who assigns post-loss benefits under a residential property insurance policy to another person. (The “assignor” is typically the homeowner or tenant named as the insured under the policy.)
  • An “assignee” is the person who is assigned post-loss benefits. (This is typically the contractor, water remediation company or other vendor providing services to the homeowner.)

The updated policies also:

  • Clarify that assignment agreements do not change the policy’s performance obligations.
  • State that in the event of a covered property loss, Citizens has no duty to provide coverage to an assignee who fails to comply with specific statutory duties.
  • Require assignees to provide Citizens with written notice of intent to initiate litigation before filing a lawsuit.

Citizens will include a Notice of Change in Policy Terms with their 2020 renewal offers. Other insurers may make similar changes to their homeowner’s insurance policy forms in the near future. In the meantime, please contact us if you have any questions about your homeowners’ insurance coverage.

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