The Florida House of Representatives recently approved HB 7015 with an 82-20 vote. HB 7015 would make significant changes to state law relating to assignment of benefits (“AOB”) and related legal fees in property insurance cases. Abuse of the existing AOB law has created challenges for insurers.
Florida’s current AOB law permits contractors to approach homeowners with a promise to fix damage, in exchange for signing over any insurance benefits to which the homeowners may become entitled. The contractor thereby assumes control of the submission, settlement and litigation of the insurance claim. The insured’s right to recover attorneys’ fees in a dispute with the insurer has provided an incentive for a lawyer-driven process in which attorneys file litigation over even minor differences between amounts claimed for repairs (frequently inflated) and the amounts offered by insurers in an effort to garner fees.
HB 7015 would alter the AOB process. HB 7015 would require all AOBs to be in writing and would allow a policyholder rescind an AOB within seven days of execution without penalty. It would also require cost estimates to be created before work is done, require a contractor to notify a carrier that it intends to sue, and modify the attorney fee award regime in a manner that would reduce significantly the number of cases in which contractors and their lawyers would have an incentive to pursue litigation against insurers. HB 7015 now heads to the state Senate, which rejected a similar bill that passed the House last year.