One of the topics presented at the recent WIND Conference was Assignments of Benefits. Many public adjusters were in attendance because most public adjusters are paid by an assignment of benefits. The Windstorm workshop panel with Gerald Albrecht, Esq., Christine Gudaitis, Esq., and Craig Kluger provided a through two hour analysis on assignments. Certain discussion and materials were devoted to assignments concerning public adjusters, contractors/vendors, and the Florida case, Shaw v. State Farm Fire & Casualty Company.1 For policyholders, assignments for the payment of services or for a claim in full are very important because the obligations and payment due to the policyholder change.
For compensation, a public adjuster is often assigned a small percentage of a claim. The amount a public adjuster can charge is often limited by the law in a particular state. In Florida, the administrative code limits the amount a public adjuster can charge during a state of emergency to 10%.2 Public Adjusters assisting on Citizens Insurance Claim are limited to a maximum amount of 10% of the additional amount paid in excess of an amount originally offered by Citizens. For other claims, public adjusters in Florida are limited to 20%, unless the claim is paid within the year following a declared state of emergency.
Policyholders can also pay contractors with an assignment of benefits. The language in an assignment of benefits to a contractor or a vendor is a common issue that comes up in the cases we handle. Often, vendors and contractors render emergency services and are helping policyholders in a time of desperate need. However, because of the unfamiliarity of the situation, policyholders really need to understand what they are signing. Unlike the regulations on public adjusters, assignments to contractors can be for the total amount of benefits. Contract language must be carefully considered by policyholders because insurance companies and courts look at every word when issues of payment arise. Policyholders should look for language that limits their interests and ask for clarification before they sign. If an assignment of benefits is given to anyone, this person or company will be included as a payee on the proceeds check. Policyholders should make sure the amount a third party is paid is limited to the actual work performed.
In Shaw, the Court addressed assignments of benefits. We know that under a policy of insurance, a policyholder has duties and obligations. Many of the posts on this blog have addressed these duties, including proof of loss, examinations under oath and production of documents. But what happens to the insureds’ obligations when they give an assignment of benefits to a third party? In Shaw, the Court held when the assignee has only agreed to an assignment of insurance benefits, the assignment does not entail the transfer of duties under the insurance contract. Of course, policyholders are still obligated to comply with the duties under their policies. Insureds should not think that because they have assigned benefits to a contractor, they no longer must give an examination under oath or submit a proof of loss. Policyholders can be lulled into a sense of security when others are working on various parts of a claim, including helping repair the damages or evaluate the amount of damage. But insureds must their insurance companies have everything requires to pay claims.
1 Shaw v. State Farm Fire & Cas. Co., 37 So. 3d 329 (Fla. 5th DCA 2010).
2 Fla. Admin. Code Ann. R. 69B-220.201