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‘AOB’ Fight Goes to Fla. Supreme Court

Anchor Property and Casualty claimed an assignment-of-benefit claim was constitutionally illegal. So far, a lower court agreed but Anchor lost in a court of appeal.

TALLAHASSEE, Fla. – A constitutional dispute about the use of the insurance practice known as “assignment of benefits” (AOB) has gone to the Florida Supreme Court.

Anchor Property and Casualty Insurance Co. wants the state Supreme Court to overturn a ruling by a panel of the 5th District Court of Appeal in a case stemming from a home damaged by Hurricane Irma in 2017, according to documents posted this week on the Supreme Court website.

Homeowner Wayne Parker filed a damage claim with Anchor, his insurer, and then entered into an assignment of benefits agreement with Speed Dry Inc. Under the agreement, Speed Dry would do repair work, handle claim negotiations and receive direct payment from the insurer, according to last month’s appeals-court ruling.

But Anchor refused to pay Speed Dry, leading to a lawsuit. Anchor pointed to what are known as “alienation restrictions” in the Florida Constitution about homestead property, “contending that any insurance proceeds resulting from a loss to homestead property are constitutionally protected to the same extent as the homestead property itself and cannot be assigned pursuant to an AOB (assignment of benefits),” the appeals court said.

A Seminole Court circuit judge agreed with the insurer, but the appeals court overturned that decision.

“Alienation is a term of art used in real property law that refers to the transfer of title to real property,” the appeals-court ruling said. “An assignment of post-loss insurance benefits does not transfer title of real property. Rather, it is an assignment of contract rights that places a third party in the shoes of the homeowner and in privity with the insurance company. As such, that assignment gives the third party, here, Speed Dry, the right to collect benefits under the insurance contract. The AOB conveys no interest in the homestead property.”

Property insurers in recent years have repeatedly blamed assignment of benefits for increasing costs, and the Legislature last year passed new restrictions on the practice. Those changes are not part of the Anchor case.

Source: News Service of Florida