Assignment of Benefits

When engaged by a member of the public to obtain insurance, an insurance broker is expected to possess reasonable knowledge of the types of policies, their different terms, and the coverage available in the area in which their insured seeks to be protected. If the insurance broker neglects to procure the insurance or if the policy is void or materially deficient or does not provide the coverage they undertook to supply because of their failure to exercise the requisite skill or diligence, the insurance broker may be liable to their insured for the loss sustained.
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Florida Insurance Commissioner David Altmaier

Assignment of benefits contracts for property damage claims may be going the way of the dinosaur in Florida. A recent Florida Insurance Bulletin notes that the new statute allows insurance companies to issue policies preventing an assignment of benefits if insurers offer a premium discount.
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Merlin Law Group knowledge manager Ruck DeMinico sent me recent North Dakota legislation pertaining to Assignment of Benefit contacts. This topic was also hotly debated two weeks ago at the Windstorm Insurance Conference in Orlando. Insurance restoration contractors, their lobbyists and attorneys are desperately trying to prevent any changes that would make such contracts more difficult to enter into or enforce. The insurance lobbyists and their public relation firms are doing everything they can to show contractors and their lawyers as evil and greedily taking advantage of the public trust.
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The widespread devastation of Hurricane Florence brought to a recent discussion the question of whether assignment of benefits contracts for property insurance proceeds are enforceable in North Carolina. This is a great question. In a general setting, vendors, services providers and contractors begin their work with a down payment and receive additional payments as work progresses, with many jurisdictions recognizing a contractor’s lien or service lien against the benefactor if they are not paid in full.
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In December of last year, my colleague Ashley Harris discussed Security First Insurance Co. v. Florida Office of Insurance Regulation,1 where the Florida Fifth District Court of Appeal (Fifth DCA) upheld the Office of Insurance Regulation (“OIR”) prohibition of proposed language in an insurance policy that would require “all insureds, all additional insureds and all mortgagees” named on a policy to consent to any post-loss assignment of benefits (“AOBs”) to a third party.
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