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Florida AOB Reform Charter Does Not Apply Retrofit Real Estate Insurance Law Insurance Blog



The Distribution of Benefits Agreement ("AOB") has been a highly controversial issue in Florida over the past year, with much of the controversy stemming from what is now commonly known as the Florida AOB Reform Act.

On May 23, 2019, Florida Governor Ron DeSantis signed House Bill 7065, which is now the Laws of Florida Chapter 2019-57 ("Act"). This law amended Florida's statutes §627.422 and created sections 627.7152 and 627.7153, which contain several provisions that impose significant new requirements on assignment contracts performed under residential and commercial property insurance. of the policy to a third party. This agreement gives third parties the authority to do things such as make a claim, make repair decisions and collect insurance payments without the policyholder's participation. Like most issues related to the allocation of rights, there are different perspectives on the benefits of AOB agreements in connection with property insurance. In his blog post, Florida's AOB reform proposal, came into force on July 1

, 2019: How does this affect me? explained lawyer Beaujeaux de Lapouyade of the Merlin Law Group:

AOBs affect claims adjustments, remove important rights from policyholders and may play a role in higher premiums. Nevertheless, AOB can also give policyholders stress, affect how contractors conduct business and often guarantee payment to contractors for services rendered. The Florida legislature finally decided to play ball on this hotly debated topic.

The statutory provisions of §627,7152 created a number of new requirements for a valid AOB and changed the fee-shifting framework for law firms in AOB suits. These new requirements constitute an important issue with respect to existing AOB agreements; specifically whether §627.7152 can be applied retroactively to insurances and corresponding agreements entered into before the law enters into force. Since July 2019, insurance companies have tried to use the more technical requirements of the AOB Statute to invalidate the agreement and reject all related lawsuits. In the same way, insurers have tried to avoid their obligation to pay legal fees that are otherwise due under Fla. §627,428.

As described by Merlin Law Group Attorney Ashley Harris in her blog post, Does the Florida AOB Statute apply to my contract? the attempt to invalidate the AOB agreements where the policy was entered into before until the adoption of the charter violates established Florida precedent:

[T] he Supreme Court of Florida in Menendez v. Progressive Express Insurance Company, Inc. ., considered that a very similar statutory system could not be applied retroactively to insurances issued before the statute was adopted. This case from 2010 concerned a claim for statute of limitations for personal injuries (PIP). But state and federal courts in Florida agree with the reasoning in Menendez and its application to the AOB Charter.

This concept has been proven correct in at least one recent decision in Florida. December 16, 2020, SFR Services, L.L.C. v. American Integrity Insurance Company of Florida 1 The Circuit Court of the 20th Judicial Circuit was presented with a similar argument by the carrier who sought to apply the AOB Statute to a policy entered into before the Act entered into force. The insurer, the American Integrity Insurance Company of Florida, filed a motion for dismissal, claiming that the plaintiff did not meet the strict technical requirements of Fla. State § 627.7152.

The Court finally rejected the proposal and stated:

The Court notes that both claims and law firms and costs are material rights under Menendez v. Progressive Exp. Ins. Co., Inc. 35 So. 3d 873 (Fla. 2010). Essential rights cannot be changed retroactively. This Court notes that the date of the damage disputed in this dispute occurred one day before the date on which Florida State 627.7152 entered into force. The Court finds that the law in force at the time of the conclusion of the insurance contract would apply to the granting of benefits in this case. As such, Fla. State 627.7152 does not apply to the transfer of benefits related to the plaintiff's complaint.

The Court also discussed the carrier's ability to challenge the validity of the contract. the respondent is not private with the assignment agreement has limited ability to question the validity of the award of benefits, or if there was sufficient consideration to support the assignment agreement.

This latest decision represents exactly the position taken by most Florida courts: Fla. State § 627.7152 does not apply retroactively to claims where the insurance was taken out before the law enters into force. A similar decision was taken in Castilla Roofing, Inc. v. Hartford Insurance Company of the Midwest . 2 In this case, the defendant insurance company submitted a request to dismiss the contractor's claim for law firms under Fla Stat. §627,428. Although the court in Castilla Roofing did not directly deal with the entry into force of the law, the court described when the agreement was "without a doubt" governed by Fla. §627,428 as opposed to §6277152.

The defendant claims that the insurance was in force from March 30, 2016 through March 30, 2017. (quote omitted). Therefore, the issuance of the policy probably took place on 24 May 2019 … The date when the assignment agreement was entered into, 30 April 2019, 24 May 2019 also preceded it (Quote omitted). Regardless of whether the current date is the date when the insurance was issued or the date when the assignment agreement was entered into, any claim for law firms in this case is undoubtedly governed by Fla. Stat. § 627,428. 3

While the decision in SFR Services is a more straightforward and clear holding (the law that applied when the policy was entered into would apply it should be emphasized again that these decisions Contractors and those subject to AOB should still be sure to comply with any provision of § 627.7152. Awarded must continue to look at the policy in force at the time of the loss and determine whether the policy was issued at or after Provided that the courts of appeal agree on holdings as in SFR Services, courts will continue to find that §627,7152 does not apply retroactively to AOB agreements based on policies entered into before the law enters into force.
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1 [19659023] SFR Services, LLC v. American Integrity Ins. Co. of Florida No. 2020-CA-005940 (Fla. Cir. Ct. – 20th Judi cial Cir. 16 December 2020).
2 Castilla Roofing, Inc. v. Hartford Ins. Co. of the Midwest No. 2: 19-cv-613 (M.D. Fla. January 30, 2020).
3 Castilla Roofing kl. 6, 7.


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