Oftentimes policyholders that have suffered a loss turn to representatives that will be able to help them in emergency situations. These companies may take assignments of the insurance claim proceeds as payment for their services. Examples are water dry-out companies, emergency services contractors, and fire cleanup companies. Insurance carriers have been challenging these types of assignments in recent years. A recent appeal by a water dry-out company demonstrates this.1
A homeowner suffered a water loss at her property and entered into a remediation contract with Nextgen Restoration to repair the damages. The homeowner submitted a signed assignment of benefits to Nextgen. She was insured for property damage under her policy of insurance with Citizens. Citizens paid only a part of the water remediation bill, and the lawsuit by the remediation company against Citizens followed.
Citizens initially filed a motion to dismiss the case because no policy was attached to the complaint. Later, Citizens filed an answer and affirmative defenses to the complaint claiming that there was an “invalid assignment” from the policyholder to Nextgen. During a hearing before the trial court on the motion to dismiss for failing to attach the policy to the complaint, Citizens’ counsel argued that Citizens was experiencing “an absolute crisis” with remediation companies. Citizens’ counsel then explained that Citizens “desperately” needed rulings and case law on these assignments.
Apparently the trial court was persuaded by these pleas from Citizens’ counsel. The trial court dismissed the complaint due to an invalid assignment. The water remediation company appealed that order.
The appellate court reversed the trial court’s ruling because “the trial court resolved the case on an issue that was not raised in the motion to dismiss and could not have been resolved on this record even if it had been raised.” The appellate court noted that the insurance policy had never even been placed into the record of the case.
The appellate court noted that Citizens’ argument is that the assignment of insurance proceeds is prevented by the insurance policy’s anti-assignment of the policy provision. The Court noted that provision of the insurance contract “does not appear to prevent an assignment of benefits or proceeds owing by virtue of a claim arising under the policy….we note that other cases seem to permit assignees to bring similar actions.”
The comments by the appellate court unrelated to its holding of the case seem to indicate the Court’s recognition of these types of assignments. The effort by Citizens to invalidate the assignment in this case was surprising. This seems to be a common attack launched by insurance carriers to these necessary and vital emergency services vendors’ contracts following property losses. We will monitor updates on the law in this area as cases are decided involving the assignment of benefits issue.
1 Nextgen Restoration Inc. v. Citizens Property Ins. Corp., No. 2D12-2990 (Fla. 2d DCA 2013).