AOB Reform
Workers fixing a roof
Getty Images News

A Look at Efforts to Reform Assignment of Benefits

The 2019 Legislature made significant changes to the AOB process to help curb the abuse that was leading to rising property insurance premiums.

Assignment of benefits litigation has exploded across Florida in recent years, resulting in a significant increase in property insurance premiums. 

AOB abuse is typically associated with non-storm-related water and roofing claims after policyholders assign their post-loss insurance benefits to a third party, typically a vendor. The vendor then works directly with the insurer to make repairs and bill for compensation.

Some vendors and attorneys found ways to abuse the AOB process by overcharging for repairs and suing insurers who refused to pay the overstated amounts.

After years of effort, the 2019 Legislature finally achieved significant reforms to the AOB process. The reforms do not prohibit AOB, but rather they establish guidelines designed to limit abuses and litigation costs.

Relief provided by HB 7065

With the passage of HB 7065, assignments must be in writing, include an itemized estimate of services, an informative policyholder disclosure, and allow 14 business days for policyholders to rescind the assignment.

Lastly, the assignee must provide a copy of the assignment to the insurer within three business days after the assignment is executed or the work has begun, whichever comes first.

Emergency repairs and prelitigation requirements

Emergency repairs to protect against further damage to the property are often involved. These repairs are now limited to $3,000 or 1% of the policy limits. Additionally, certain pre-litigation requirements must be satisfied before an assignee can file a lawsuit against the insurer.

Attorney fees

The crux of the AOB issue has always centered on one-way attorney fees. This has been replaced by a formula to determine which party, if either, can recover attorney fees.

Depending on whether the insurer or the assignee prevails in court and the size of the recovery, the assignee or the insurer may be entitled to attorney fees. In some instances, attorney fees may not be recovered by either party. Previously, only vendors could recover attorney fees, while the insurers could not.

Some new policies not assignable

Lastly, insurers will be authorized to offer policies that either restrict or prohibit assignments, provided consumers are offered — at the same time — a policy with the same coverages that is assignable, and each policy that’s restricted or non-assignable must be less expensive than the same policy that is assignable.

This bill was signed into law on May 23, 2019.