Readers of this blog know my position on the ability of Tallahassee to “fix” what they perceive as a “problem” with regard to property insurance. Once Tallahassee gets involved in an issue, it usually gets resolved in a way that hurts policyholders. SB 596 is a perfect example of this phenomenon. Regardless of how you feel about the Assignment of Benefits issue, SB 596 (proposed by Senator Hukill) makes some very serious changes to the laws governing AOBs. The entire bill is attached but the highlights are below.
Under this proposed Bill, AOBS are void unless:
- It is limited to $2,500 per occurrence for work performed to mitigate or repair covered damage;
- It is provided to the insured’s property insurer within 3 business days after execution;
- It contains an estimate for proposed services and materials to be provided;
- With the exception of reimbursement for work already performed to mitigate or repair covered damage, it allows the insured to cancel the agreement, in writing, without penalty or obligation within 3 business days after the date the agreement is executed or within 3 business days after the insurer has been provided with the agreement, whichever iri ts later. However, if the agreement is executed to perform work resulting from an event for which the Governor has declared a state of emergency and is within 1 year after such declaration, the insured has 5 business days after the date the agreement is executed to cancel the agreement without penalty;
- It contains the following notice in 14-point type: WARNING: YOU ARE AGREEING TO GIVE UP CERTAIN RIGHTS YOU HAVE UNDER YOUR INSURANCE POLICY TO A THIRD PARTY. PLEASE READ AND UNDERSTAND THIS DOCUMENT BEFORE SIGNING IT. YOU HAVE THE RIGHT TO CANCEL THIS AGREEMENT WITHOUT PENALTY WITHIN 3 BUSINESS DAYS AFTER THE DATE THIS AGREEMENT IS EXECUTED OR WITHIN 3 BUSINESS DAYS AFTER YOUR PROPERTY INSURANCE COMPANY HAS RECEIVED A COPY OF THIS AGREEMENT, WHICHEVER IS LATER. IF WORK IS BEING PERFORMED AS A RESULT OF DAMAGES CAUSED BY AN EVENT FOR WHICH THE GOVERNOR HAS DECLARED A STATE OF EMERGENCY AND IS WITHIN 1 YEAR AFTER SUCH DECLARATION, YOU HAVE 5 DAYS AFTER THE DATE OF EXECUTION TO CANCEL. THIS AGREEMENT DOES NOT CHANGE YOUR DUTIES UNDER YOUR PROPERTY INSURANCE POLICY, SUCH AS PROMPTLY NOTIFYING YOUR INSURANCE COMPANY OF A LOSS AND MITIGATING YOUR PROPERTY FROM FURTHER DAMAGE.
Likewise, AOBs are void if:
- It imposes an agreement cancellation fee, a check processing fee, or a mortgage processing fee or adds an amount for overhead and profit to the amount for mitigation and repair of covered property;
- A final invoice issued under the agreement exceeds the estimated cost for work performed and the increase in cost was not authorized by the insurer;
- It purports to assign or transfer the right to enforce payment for post-loss benefits in the policy;
- It prevents or inhibits an insurer from communicating with the insured at any time; or
- It purports to transfer or create any authority to adjust, negotiate, or settle any portion of a claim to a person or entity who is not authorized to adjust, negotiate, or settle a claim on behalf of the insured or claimant under part VI of chapter 626.
I will give regular updates as to the status of this particular Bill as it works its way through the legislature. Keep in mind, this is only a bill at this point…the legislative session is still months away.