A South Florida appeals court sided with contractors that sought payment from insurance companies. In three high-profile cases from Palm Beach County, the 4th District Court of Appeal ruled against property insurers who argued that assignment of benefits were invalid.
The controversial issue is based on a practice known as “assignment of benefits” in which a homeowner signs over insurance-policy benefits to contractors who do repair work. The appeals-court panel ruled on all three of the Palm Beach County cases, though it only issued a full opinion on one of them. The case started in 2012 when the Royal Palm Beach home of William Hughes sustained wind and water damage. One Call Property Services Inc. did emergency repair work and was assigned benefits under Hughes’ policy with Security First Insurance Co.
In 2013, One Call Property Services Inc. filed a breach-of-contract lawsuit against Security First Insurance Co. arguing it had not been fully paid for the work done to Hughes’ home. The insurance company responded with a number of arguments seeking to dismiss the case, including the invalidity of the assignment of benefits under the policy and under state law. While the appeals court ruled against Security First Insurance Co., it noted that there were some unresolved legal issues in the case. The court added similar caveats in the other two cases in which Tower Hill Signature Insurance Co. and United Property & Casualty Insurance Co were involved.
In Spring of 2015, lawmakers considered a pair of bills (HB 669 and SB 1064) that would have substantially restricted the assignment of benefits in these cases, however, the bills did not pass.
The Florida Property & Casualty Association and the Florida Insurance Council filed a brief in the Security First Insurance Co. case arguing that the assignment of benefits drove up costs for the insurers and this lead to higher premiums for customers. In response, the attorneys for One Call Property Services argued that case law in Florida has long upheld the validity of such assignments and therefore they should be upheld. The appeals court said it was not in a position to evaluate the policy arguments.