Recent Florida legislation makes the assignment of benefits for a property insurance policy illegal in Florida. Recent cases show that such assignment of benefits agreements will be scrutinized by courts when insurers raise questions about their validity.
Last week, a Florida appeals court ruled that a proposed benefit allocation agreement was invalid.1 It noted the insurer’s arguments and the issue to be determined:
Citizen dismissed the complaint with prejudice, arguing that the assignment of benefits agreement, on its face, did not comply with section 627.71
52(2) (a)4., Florida Statutes (2021) (requiring that an assignment of benefits agreement “[c]have a written, itemized cost estimate per unit of the services to be performed by the assignor’) rendering the assignment agreement void and unenforceable. Id. § 627.7152(2)(d) (providing: “A contract of assignment inconsistent with this subsection is void and unenforceable.”)More specifically, Citizens argued that the assignment agreement did not contain “a written, itemized unit cost estimate of the services to be performed by the assignor” as required by the statute. In response, Total Care argued that the assignment agreement contained an itemized cost estimate per unit pursuant to the statute; Citizens lacked the opportunity to challenge the assignment agreement; and failure to comply with the statute would render the cession void, not void, and—if void—the citizens would have no standing to challenge the cession because they were not a party to or third-party beneficiary of the cession .
The court noted that prior legislation required an estimate which specified:
Enacted by the Legislature in 2019, Section 627.7152, Florida Statutes (2021), governs awarding of benefit agreements. Subsection (2)(a) enumerates several requirements for a valid and enforceable transfer of benefits agreement. Relevant to the present case, the statute requires: “An assignment agreement must… [c]have a written, itemized cost estimate per unit of the services to be performed by the transferor.” … In addition, section (2)(d) provides: “A contract of assignment inconsistent with this subsection is void and unenforceable. .’
A mere list of costs and services proved insufficient:
Although Total Care claims that this document meets the statute’s requirement of “a written, itemized unit cost estimate of the services to be performed by the recipient,” we conclude that 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 list of services offered by Total Care, divided into two categories – “Emergency Service Rates” and “Non-Emergency Rates.”
The services listed under the two categories overlap almost entirely (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 non-emergency basis. Such a generic menu of services available to all customers is clearly inconsistent with the “itemized unit cost estimate of the services to be performed” required by section 627.7152(2)(a) 4.
This document is not actually an “estimate” at all, as it fails to describe: the specific services performed by Total Care on Mr. Bernal’s property;….”
The court cited with approval a similar case decided last year:
We find persuasive reasoning and holding of our sister court in Air Quality Experts Corp. v. Fam. Sec. ins. Co., 351 So. 3d 32 (Fla. 4th DCA 2022), which is substantially indistinguishable from this case. In Air Quality, a holder under a homeowner’s property insurance assignment agreement submitted bills to the insurer. When the insurer refused to pay, the plaintiff filed suit and attached the assignment agreement and two invoices to the complaint. The license agreement contained “a standard price list of the types of services offered by the assignor with their unit price.” As the Fourth District explained, ‘[t]here there was nothing in the appendix that tied the price list to the insured’s residence so that it could be considered an estimate.’
The bottom line is that restoration contractors should expect their award of benefit contracts to be challenged by insurance companies in Florida. These assignments must meet the letter of the law to be enforceable. Soon this will be outdated law as all assignments will eventually be disqualified based on the recently passed legislation.
Today’s thought
Lawyers spend a lot 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).
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