Recent Florida legislation makes the assignment of benefits for a property insurance policy illegal in Florida. Recent cases demonstrate that such assignment of benefit contracts will be critically examined by courts when insurance companies raise issues about their validity.

Last week, a Florida appellate Court ruled that a proposed assignment of benefit contract was void.1 It noted the insurer’s argument and the issue to be determined:    

Citizens moved to dismiss the complaint with prejudice, contending that the assignment of benefits agreement, on its face, failed to comply with section 627.7152(2) (a)4., Florida Statutes (2021) (requiring that an assignment of benefits agreement ‘[c]ontain a written, itemized, perunit cost estimate of the services to be performed by the assignee’) rendering the assignment agreement invalid and unenforceable. Id. § 627.7152(2)(d) (providing: ‘An assignment agreement that does not comply with this subsection is invalid and unenforceable.’)

More specifically, Citizens contended the assignment agreement did not contain ‘a written, itemized, per-unit cost estimate of the services to be performed by assignee’ as required by the statute. In response, Total Care contended that the assignment agreement contained an itemized per-unit cost estimate in compliance with the statute; Citizens lacked privity to challenge the assignment agreement; and non-compliance with the statute would render the assignment agreement voidable, not void, and—if voidable— Citizens would have no standing to challenge the assignment agreement since it was not a party to, or third-party beneficiary of, the assignment agreement.

The court noted that prior legislation required an estimate which was itemized:

Enacted by the legislature in 2019, section 627.7152, Florida Statutes (2021), governs assignment of benefits agreements. Subsection (2)(a) enumerates several requirements for a valid and enforceable assignment of benefits agreement. Relevant to the instant case, the statute requires: ‘An assignment agreement must… [c]ontain a written, itemized, per-unit cost estimate of the services to be performed by the assignee.’… In addition, section (2)(d) provides: ‘An assignment agreement that does not comply with this subsection is invalid and unenforceable.’

A mere listing of costs and services was found not to be sufficient:

While Total Care contends this document meets the statute’s requirement of ‘a written, itemized, per-unit cost estimate of the services to be performed by the assignee,’ we conclude it falls far short. It is not tailored to the insured or to the services to be performed on this particular property. Instead, it is simply a listing of services offered by Total Care, divided into two categories—’Emergency Service Price’ and ‘Non-Emergency Prices.’

The services listed under the two categories overlap nearly completely (the emergency category lists twenty-two services, while the non-emergency category lists eighteen identical services), with the difference being the cost of an available service performed on an emergency versus nonemergency basis. Such a generic menu of services available to any customer manifestly fails to comply with the ‘itemized, per-unit cost estimate of the services to be performed’ required by section 627.7152(2)(a) 4.

Indeed, this document is not an ‘estimate’ at all, because it fails to set forth: the specific services being performed by Total Care on Mr. Bernal’s property;….”

The court cited with approval a similar case ruled upon last year:

We find persuasive the reasoning and holding of our sibling court in Air Quality Experts Corp. v. Fam. Sec. Ins. Co., 351 So. 3d 32 (Fla. 4th DCA 2022), which is indistinguishable in all material respects from this case. In Air Quality, an assignee under a homeowner’s property insurance assignment agreement submitted bills to the insurer. When the insurer refused to pay, the assignee sued, attaching to the complaint the assignment agreement contract and two invoices. The assignment agreement included ‘a standard price list of the types of services offered by the assignee with their unit price.’ As the Fourth District explained, ‘[t]here was nothing in the attachment which tied the price list to the insured’s home so that it could be considered an estimate.’

The bottom line is that restoration contractors should expect their assignment of benefit contracts to be challenged by insurers in Florida. Those assignments will have to meet the letter of the law to be enforceable. Before long, this will be antiquated law because all assignments will eventually be disallowed based on the recently passed legislation.

Thought For The Day  

Lawyers spend a great deal of their time shoveling smoke.

—Oliver Wendell Holmes, Jr.

1 Total Car Restoration v. Citizens Prop. Ins. Corp., No. 3D22-711, 2023 WL 2505937 (Fla. 3d DCA Mar. 15, 2023).