First District Court of Appeal Upholds Florida Office of Insurance Regulation’s Disapproval of Post-Loss Assignment of Benefits Language
Jul 6, 2015
The First District Court of Appeal issued an opinion on June 22, 2015 in which it affirmed the Florida Office of Insurance Regulation’s disapproval of new policy language proposed by Security First Insurance Company that would require the insurer’s consent to any post-loss assignments of insurance benefits (“AOB”).
Security First argued that it was free to require consent to any AOB as a matter of contract law, and urged the Court that policy concerns favored permitting the proposed language.
The Court did not directly address Security First’s arguments, but relied on Florida case law that acknowledged an insured’s right to execute a post-loss AOB.
Although the Court recognized policy concerns that typically accompany AOBs, such as evidence that inflated or fraudulent claims submitted by remediation companies often exceed the cost of comparable services by 30 percent, that policyholders often do not understand the effect of AOBs, and that AOBs are often used to threaten litigation and extract higher payments from insurers, the Court nevertheless agreed with the Fourth District Court of Appeals’ reasoning in One Call Property Services, Inc. v. Security First Insurance Company, finding that the Florida Legislature is best positioned to address them.
The opinion is not final until the time for rehearing expires, and any motion for rehearing is decided.
To read the opinion, click here.
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