Assignment of Benefits Under Florida Law: Businesses and Insurers Beware

Florida’s assignment of benefits statute affects homeowners and businesses alike, and both parties should proceed with caution when dealing with an assignment of benefits agreement. Indeed, section 627.7152 of the Florida Statutes codifies the requirements for a valid assignment of benefits agreement. See Section 627.7152 of the Florida Statutes.

What Is an Assignment of Benefits Agreement

An assignment of benefits agreement is an agreement whereby insurance benefits are transferred from the policy holder to a third party.  The applicable Florida Statute defines such an agreement as:

any instrument by which post-loss benefits under a residential property insurance policy or commercial property insurance policy . . . are assigned or transferred, or acquired in any manner, in whole or in part, to or from a person providing services, including, but not limited to, inspecting, protecting, repairing, restoring, or replacing the property or mitigating against further damage to the property.

Assignment of Benefits Agreements Are Not Always Valid and Enforceable

In a recent Florida case, an assignment of benefits agreement was under review to determine whether the services provided to the homeowner fell withing the confines of Section 627.7152 of the Florida Statutes.  See The Kidwell Group, LLC v. American Integrity Insurance Company of Florida.

In Kidwell, the homeowners suffered hurricane damage to their home, and signed an assignment of benefits agreement with Air Quality in exchange for certain services, including mold testing. In exchange, Air Quality expected to receive the assignment of post-loss benefits of the homeowners’ insurance proceeds.  The assignment of benefits document specifically provided that Air Quality’s services were not “meant to protect, repair, retore, or replace damaged property.”  After performing its services, Air Quality submitted its invoices to the homeowners’ insurer.  That insurer refused to pay the invoices, so Air Quality sued the insurer.

In response to the lawsuit, the insurer filed a motion to dismiss, arguing that the assignment of benefits agreement failed to meet certain requirements of section 627.7152 of the Florida Statutes.  Air Quality argued the agreement was not an assignment of benefits agreement, and did not fall within any of the service types set forth in the above-referenced statute.  The trial court agreed with the insurance company and dismissed Air Quality’s complaint.

The appellate court confirmed that the dismissal was proper.  In doing so, the appellate court scrutinized the language of that assignment agreement and noted that its purpose was to “determine repairability, scope and/or categorization of water damage, testing for contamination . . .  in order to prepare a forensic report and/or remediation protocol report . . . .”  The court also noted that Air Quality alleged in its complaint that it agreed to provide to the homeowners “reasonable and necessary assessment services” relating to the hurricane damage.  The appellate court found that the agreement was subject to the assignment of benefits statute “regardless of Air Quality’s attempt to disguise it is as something else.”  According to the appellate court, Air Quality agreed to provide services to the homeowners in connection with efforts to remediate damages to the home.

What Does Kidwell Teach Us

As a consumer, before signing an assignment of benefits agreement, know the scope of work and your rights under Section 627.7152 of the Florida Statutes.  As a contractor, seeking to use assignment of benefits agreements in your business, you must be familiar with Section 627.7152 of the Florida Statutes, and consult counsel to properly draft that assignment agreement.  Failure to have a properly drafted and statutorily compliant  assignment of benefits agreement could be the difference in payment or non-payment for your work.