Assignment of benefits is one of the highly debated topics facing policyholders and insurance companies in first-party property disputes. You can find many entries discussing assignment of benefits on our blog.
In Bioscience West, Inc. v. Gulfstream Property and Casualty Insurance Company,1 the insured suffered a water damage loss and hired an emergency water mitigation company to perform emergency water removal and construction services on her home. She executed a document titled “Assignment of Insurance Benefits” that authorized the company to directly bill and receive payment from the insurance company for its mitigation services:
I hereby assign any and all insurance rights, benefits, and proceeds pertaining to services provided by BIOSCIENCE WEST INC. under the above referenced policy to BIOSCIENCE WEST, INC. I hereby authorize direct payment of any benefits or proceeds to my property . . ., as consideration for any repairs made by BIOSCIENCE WEST, INC.
The insured assigned the post-loss benefits and proceeds of her policy without the insurance company’s consent.
The insurance policy’s assignment provision stated: “Assignment. Assignment of this policy will not be valid unless we give our written consent.”
When the insured filed a claim, the insurance company denied the claim, concluding that the claimed damages were not covered by the policy. The water mitigation company then filed a lawsuit against the insurance company because it was an assignee of the right to recover a benefit under the insured’s policy. In a ruling on a motion for summary judgment, the trial court concluded that the insured was precluded from assigning the benefits of her homeowner's insurance to the emergency water mitigation company, without first receiving the insurer’s consent.
On appeal, the Second District Court of Appeal, looked at the plain meaning of the phrase “assignment of this policy” and noted there was no contractual language restricting the assignment of benefits post-loss:2
Gulfstream does not and cannot argue that the entire policy was unilaterally transferred from Ms. Gattus to Bioscience, which would have been void under the language of the policy's anti-assignment clause. Instead, it is clear that Ms. Gattus merely assigned to Bioscience the “insurance rights, benefits, and proceeds pertaining to services provided by” the policy in consideration for Bioscience's emergency mitigation services and authorization to directly bill and to be directly paid by Gulfstream. (Emphasis added). Stated differently, it was a post-loss assignment of a benefit under the policy to Bioscience, namely a right to seek payment for the mitigation services it rendered under the policy, not an assignment of “this policy” issued by Gulfstream to Bioscience. See Peck v. Pub. Serv. Mut. Ins. Co., 114 F. Supp. 2d 51, 56 (D. Conn. 2000) (“An assignment before a loss involves a transfer of a contractual relationship, whereas an assignment after a loss is the transfer of a right to a money claim.” (citing 3 Couch on Insurance § 35.7 (3d ed. 1999))).
A review of the “loss-payment” provision provides support for our interpretation that the “Assignment” provision of the insurance policy was not intended to apply to assignments of benefits derived from the policy but instead to assignments of the entire policy. See Cespedes, 161 So. 3d at 584 (noting construction of an insurance contract as a whole). Specifically, an examination of the loss-payment provision demonstrates that Gulfstream contemplated the need to pay third parties who were “legally entitled” as follows: “[Gulfstream] will pay you unless some other person . . . is legally entitled to receive payment.” (Emphasis added). In sum, Gulfstream anticipated the need to pay those “legally entitled to receive payment” under the policy, which, pursuant to Ms. Gattus's “Assignment of Insurance Benefits” agreement with Bioscience, entitled Bioscience to receive any payments due under the policy. Thus, there is no contractual language restricting the post-loss assignment of benefits under “this policy” without Gulfstream's consent.
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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. See One Call Prop. Servs. Inc., 165 So. 3d at 755 (“Even when an insurance policy contains a provision barring assignment of the policy, an insured may assign a post-loss claim.”). Nearly 100 years ago, the Florida Supreme Court recognized that provisions in an insurance policy requiring consent to assignment of that policy do not apply to assignments after a loss. W. Fla. Grocery Co. v. Teutonia Fire Ins. Co., 77 So. 209, 210-11 (Fla. 1917) (“The policy was assigned after loss, and it is a well-settled rule that the provision in a policy relative to the consent of the insurer to the transfer of an interest therein does not apply to an assignment after loss.”). This principle was reaffirmed in 1998, when our supreme court explained that “an insured may assign insurance proceeds to a third party after a loss, even without the consent of the insurer.” Lexington Ins. Co. v. Simkins Indus., Inc., 704 So. 2d 1384, 1386 n.3. (Fla. 1998).
As the First District recently observed, “[o]n this point we find an unbroken string of Florida cases over the past century holding that policyholders have the right to assign such [post-loss] claims without insurer consent.” Sec. First Ins. Co. v. State, Office of Ins. Regulation, 40 Fla. L. Weekly D1449, D1449 (Fla. 1st DCA June 22, 2015). We agree and hold that post-loss insurance claims are freely assignable without the consent of the insurer. Id. (holding that post-loss insurance claims are assignable without the consent of the insurer); One Call Prop. Servs. Inc., 165 So. 3d at 755 (same); Accident Cleaners, Inc., 40 Fla. L. Weekly at D863 (“Dating back to 1917, the Florida Supreme Court recognized that provisions in insurance contracts requiring consent to assignment of the policy do not apply to assignment after loss.”); Citizens Prop. Ins. Corp. v. Ifergane, 114 So. 3d 190, 195 (Fla. 3d DCA 2012) (“Post-loss insurance claims are freely assignable without the consent of the insurer.”).
The Second District Court of Appeal held that the policy did not restrict the assignment of benefits after a loss has occurred—a financial benefit derived from the policy. The plain language of the policy merely prohibited the insured’s unilateral assignment of the entire policy.
1 Bioscience West, Inc. v. Gulfstream Prop. & Cas. Ins. Co., No. 2D14-3946, (Fla. 2d DCA Feb. 5, 2016).
2 Id. at 5-6; Id. at 8-9.