In my initial blog on the Assignment of Benefits (AOB) reform statute, I described the 20th Judicial Circuit Court’s decision finding that §627.7152 cannot retroactively change substantive rights.1 This holding found that the law in effect when the subject policy was entered into applied to the assignment of benefits contract at issue in subsequent litigation. While the holding in that case focused on both pre-suit requirements and attorney’s fees and costs as the substantive rights being considered, another Florida court has recently discussed a similar concept regarding the retroactive applicability of the statute.

In Extreme Emergency Fire & Water Restoration LLC v. Certain Underwriters at Lloyd’s of London,2 the Third District Court of Appeal of Florida was tasked with reviewing a similar issue with respect to the retroactive application of §627.7152. In this case, the insured suffered a loss to their home on September 3, 2018. On that date, the insureds’ property was covered by a homeowner’s insurance policy with Certain Underwriters at Lloyd’s of London (“Lloyd’s). Attempting to mitigate and repair their damages, the insureds hired Extreme Emergency Fire & Water Restoration, LLC (“Extreme”) and assigned to Extreme their rights to payment for the claim under the Lloyd’s policy. Extreme thereafter sent an invoice to Lloyd’s for work done at the property, which Lloyd’s refused to pay. Extreme then filed a breach of contract action pursuant to their rights under the assignment.

In support of its motion for summary judgement, Lloyd’s asserted as an affirmative defense a provision of the policy requiring written consent prior to an assignment of benefits under the policy. The Anti-Assignment Endorsement read as follows:

In consideration of the premium paid, it is hereby agreed and understood that rights, benefits and duties under the policy for which I am applying may not be assigned and/or transferred, either before or after a loss, without the written consent of the company, except in the case of death of an individual named insured.

After considering both parties positions, the trial court granted Lloyd’s summary judgement motion finding that the failure to obtain written consent invalidated the AOB contract pursuant to the Anti-Assignment Endorsement.

On appeal, the Third District Court of Appeal began its analysis by reciting the longstanding principles associated with post-loss assignment of benefits in Florida, stating:

[A]n insured need not obtain the consent of the insurer before making a post-loss assignment of its right to payment of a claim under an insurance policy, and any attempt by an insurer to restrict the insured’s right to do so is invalid.

With this principle in mind, the court quickly disposed of Lloyd’s attempt to distinguish the subject endorsement as being “negotiated” through the application for insurance as opposed to being contained in the policy itself.

While the basis for the holding relied on the age-old principle that attempts to unilaterally restrict assignment agreements were invalid, the court did recognize the legislature’s ability to decide/change these issues as a matter of public policy. The DCA cited the legislature’s decision authorizing insurance companies under certain conditions to make available a residential or commercial property insurance policy restricting the assignment of post-loss benefits in the AOB reform statute. Notably, however, and for the purposes of this blog, there was no dispute that the AOB reform statute did not apply to policies entered into prior to July 1, 2019.

The parties concede (and we agree) that §627.7153 does not apply to the agreement in the instant case, as this new law “applies to a policy issued or renewed on or after July 1, 2019.”3

While this decision does not primarily rely on the principle that laws cannot retroactively change substantive rights, it is another example of the refusal by courts to retroactively apply the AOB reform statute. Although there is still some uncertainty around the statute, one theory has been consistent: It does not apply retroactively to policies issued or renewed on or after July 1, 2019.
1 SFR Services, L.L.C. v. American Integrity Ins. Co. of Florida (Order attached).
2 Extreme Emergency Fire & Water Restoration LLC v. Certain Underwriters at Lloyd’s of London, No. 3D20-5, 2020 WL 7379133 (Fla. 3rd DCA Dec. 16, 2020).
3 Id. at 2, Footnote 1.