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March 14, 2017 | Blog Post| 2017 Florida State Legislature to Consider Bills Aimed at Assignments of Benefits, Water Losses, Appraisers, and Umpires

The 2017 Florida Legislative Session convened on March 7.  Of particular interest to property insurers are the following bills, which we are closely watching: SB 944, proposing licensing requirements upon appraisers and appraisal umpires; SB 1038 and HB 1218, proposing a statute concerning assignments of benefits; and SB 1218, proposing licensing requirements on those who perform water damage restoration and prohibiting policy provisions that preclude post-loss assignments of benefits.  These are only bills.  The text of these bills may change over their life and they are not the law unless and until passed and enacted.

SB 94

Insurance Appraisals and Umpires

Sponsored by State Senator Frank Artiles 

This bill seeks to amend numerous existing statutes, creating several new sections and repealing one. The bill pertains to insurance appraisals, appraisers, and umpires and sets forth, among other things:

  • licensure and appointment requirements of appraisal umpires;
  • licensure requirements for an adjuster when serving as an appraiser under certain conditions;
  • prohibition against certain disqualified persons from serving as an appraiser or umpire;
  • requirements upon persons applying for licensure as an umpire to submit fingerprints, and allowing the Department to obtain credit and character reports for certain applicants;
  • requirements of  continuing education for licensure as an umpire;
  • certain criteria for refusal, suspension, or revocation of an umpire’s license;
  • ethical standards for, and grounds for disqualification of, appraisal umpires.

If signed into law, the new language would take effect on October 1, 2017 and apply to appraisals requested on or after that date.  The full text of SB 94 may be found here:  http://www.flsenate.gov/Session/Bill/2017/00094

SB 1038

Assignments of Benefits (AOB)

Sponsored by:   State Senators Dorothy L. Hukill and Kathleen Passidomo

The proposed definition of “assignment agreement” under the bill would be all-encompassing of any instrument that assigns post-loss property insurance benefits for services to repair, replace, mitigate, regardless of how such instrument is named.  The act would further:

  • prohibit award of attorney’s fees under sections 627.428 or 626.9378 in favor of any person or entity suing an insurer pursuant to an “assignment agreement;” 
  • require, for an “assignment agreement” to be valid that it: 1) be in writing and executed by all insureds; 2) include a penalty-free 7-business day cancellation provision; and 3) include a provision requiring the assignee to provide the “assignment agreement” to the insurer within 3 days after execution by any named insured; 
  • require, for an “assignment agreement” to be valid that it must not include: 1) a penalty or fee provision for rescission; 2) a check or mortgage processing fee; 3) a penalty or fee provision  for cancellation; or 4) an administrative fee provision;
  • dictate that failure to comply with the proposed act creates a presumption of prejudice against the insurer and shift the burden of proving no prejudice to the party seeking the benefits; 
  • require assignees or transferees maintain all records, cooperate fully with the insurer in investigation of the claim, provide records to the insurer, provide the assignment agreement to the insurer within 3 days, submit to examinations under oath and recorded statements by the insurer, and participate in appraisal; 
  • require that acceptance of an “assignment agreement” by an assignee would release the insured from any payment to the assignee arising from the loss, although the insured would remain responsible for the deductible. 

If signed into law, the act would create section 627.7151, Fla. Stat. and apply to “assignment agreements” executed after July 1, 2017.  The full text of the bill may be found here: http://www.flsenate.gov/Session/Bill/2017/1038/?Tab=BillText

HB 1421

Property Insurance Assignment Agreements

Sponsored by State Representatives James W. Grant and Rene Plasencia

Similar to SB 1038, this bill proposes a definition of “assignment agreement” which would be all-encompassing of any instrument that assigns post-loss property insurance benefits for services to repair, replace, mitigate.  If enacted, the proposed statute would further:

  • require assignees to provide a 21-day notice to the insurer and the insured of the intent to litigate pursuant to the “assignment agreement,” specifying the amount of damages and the amount claimed;
  • require insurers to have a procedure in place for the investigation of such claims once said notice is received;
  • require a formal response from the insurer to the foregoing notice;
  • limit recovery of attorney’s fees and costs in an action on an “assignment agreement” to this section and section 57.105.
  • entitle an assignee to attorney’s fees and costs if it prevails on a claims amount equal to or greater than the prejudgment settlement amount requested;
  • entitle the insurer to attorney’s fees and costs from the assignee if the insurer prevails and the amount awarded to the assignee is equal to or less than the prejudgment settlement amount offered by the insurer;
  • dictate no attorney’s fees be awarded to either party if the assignee prevails in an amount less than the prejudgment amount requested, but more that the prejudgment amount offered by the insurer;
  • require no “assignment agreement” be valid unless: 1) it is in writing and executed by all named insureds; 2) includes a penalty-free 7-business day written cancellation provision; 3) includes a provision requiring the assignee to provide the “assignment agreement” to the insurer within 3 days after execution by any named insured (with specified acceptable methods of delivery); 4) contain a written, itemized cost estimate of services; 5) includes proof of licensure by water remediation professionals and that their work be performed in accordance with the American National Standards Institute; 6) relate only to work performed; and 7) contain specified language in certain format as detailed in the section, placing the assignor on notice of his rights;
  • require an “assignment agreement” be invalid if it includes: 1) a penalty or fee provision for rescission; 2) a check or mortgage processing fee; 3) a penalty or fee provision  for cancellation; or 4) an administrative fee provision;
  • dictate that failure to comply with the proposed act creates a presumption of prejudice against the insurer and shift the burden of proving no prejudice to the party seeking the benefits. 
  • require assignees: 1) maintain all records of services provided; 2) cooperate with the insurer’s investigation; 3)provide requested documents to the insurer; 4) permit the insurer to conduct an examination related to the assignment and services provided; 5) deliver the executed assignment agreement to the insurer within 3 days; 6) provide the insurer an itemized, per-unit cost statement; 7) participate in appraisal or ADR; 8) provide current revised statements of scope of work or supplemental repairs; 8)guarantee the work is performed to accepted industry standards; 8) may not charge the insured more than the deductible unless other work is performed at the insured’s expense; may not pay more than $300 in referral fees;
  • require that acceptance of an “assignment agreement” by an assignee would release the insured from any payment to the assignee arising from the loss, although the insured would remain responsible for the deductible.   

If signed into law, the act would create section 627.7152, Fla. Stat. and apply to “assignment agreements” executed after July 1, 2017.  The full text of the bill may be found here: http://www.flsenate.gov/Session/Bill/2017/01421

SB 1218

Property Repair

Sponsored by State Senator Gary M. Farmer, Jr. 

This bill proposes amending section 468.8411, Fla. Stat. to define “professional water damage restorer” and “water damage restoration,” as well as amending section 468.8414, Fla. Stat. (pertaining to licensure of mold assessors and mold remediators), to require licensure of applicants qualified to practice water damage restoration.  As part of the licensing criteria, the proposed legislation would require persons applying be of good moral character, carry insurance required by section 428.8421, and satisfy IICRC S500 standards.  Persons who meet the definition of “professional water damage restorer” would be subject to the same penalties and prohibitions placed upon mold assessors and mold remediators under 468.8419.

In addition, the bill seeks to amend section 627.422, Fla. Stat. concerning assignments of policies to codify certain requirements and restrictions upon assignment of post-loss benefits under property policies.  The proposed language requires that post-loss assignments of benefits:

  • be in writing, delivered to the insurer within seven business days after execution of the agreement or seven days after termination of a declared state of emergency, whichever is later, and delivered through a specified reporting method as stated on the insurer’s website;
  • be limited to work performed by the assignee;
  • contain an accurate, up-to-date statement of the scope of work to be performed;
  • guarantee the work meets accepted industry standards;
  • not charge the insured more than the policy deductible;
  • not charge the insured directly, except for non-covered work;
  • not pay referral fees of more than $750;
  • for water claims, require the assignee to be licensed in accordance with the requirements of the previous language amending section 468.8411.

The proposed legislation would further require seven days advanced notice to the insurer before any lawsuit related to the assignment is initiated, and provide restrictions upon insurers’ use of preferred vendors.  If signed into law, the changes would take effect on July 1, 2017.  The full text of the bill may be found here:  http://www.flsenate.gov/Session/Bill/2017/01218/?Tab=BillText

Stay tuned for the result of the submission of these bills at the end of the Legislative Session.

Diane M. Barnes-Reynolds

A Partner at Butler Weihmuller Katz Craig LLP in Tampa, FL. Diane M. Barnes-Reynolds practices in our First-Party coverage department.

September 06, 2018 Blog PostFull Consent to Assignments

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