A Florida Senate bill that aims to revise the state’s laws related to assignments of benefits (AOBs) has passed the Rules Committee with a vote of 11-6 and now moves to the full Senate for review. While both the bill, SB 122, and its companion House bill, HB 7065, originally focused on auto glass shops, neither bill addresses auto glass shops now. According to the Florida Senate, the bills are now identical in text.
An April 18 analysis of SB 122 provided on the Senate website explains that the bill “eliminates the ‘one way’ attorney fee for assignees.”
“The bill requires the assignee to give the insurer notice prior to the filing of a lawsuit and make a pre-suit demand,” reads the analysis. “The insurer must respond with a pre-suit settlement offer. To award fees, the court must compare the difference between the demand and the offer with the judgment obtained and award fees based on a formula. The bill allows insurers to make available a property insurance policy that prohibits or restricts the assignment of benefits. If an insurer offers a policy that prohibits or restricts assignments, it must offer a policy with benefits that are assignable.”
Further, “The bill requires assignees to comply with some of the policyholder’s duties under the insurance policy. Insurance policies generally require insureds to cooperate with the claims investigation, sit for examinations under oath by the insurance company, and participate in appraisal. This bill applies those duties to the assignees as well,” according to the analysis.
The analysis goes on to discuss the origins of the bill. “In recent years, insurers have complained of abuse of the assignment of benefits process,” reads the analysis.
It references a court filing by an insurance company that describes the issue, as follows:
“The typical scenario surrounding the use of an ‘assignment of benefits’ involved vendors and contractors, mostly water remediation companies, who were called by an insured immediately after a loss to perform emergency remediation services, such as water extraction. The vendor came to the insured’s home and, before performing any work, required the insured to sign an ‘assignment of benefits’ – when the insured would be most vulnerable to fraud and price gouging. Vendors advised the insured, ‘We’ll take care of everything for you.’ The vendor then submitted its bill to the insurer that was, on average, nearly 30 percent higher than comparative estimates from vendors without an assignment of benefits. Some vendors added to the invoice an additional 20 percent for ‘overhead and profit,’ even though a general contractor would not be required or hired to oversee the work. Vendors used these inflated invoices to extract higher settlements from insurers. This, in turn, significantly increases litigation over the vendors’ invoices.”
The current bills are designed to address the above issue, according to the analysis, but note that the latest version of the SB 122 “removes provisions relating to automobile windshield glass from the bill.”
However, a recent article in Insurance Journal states “Industry advocates, including the CPC and APCIA, have encouraged lawmakers to include auto glass in the final legislation.”
The analysis includes a chart showing “the percentage of lawsuits with an AOB for water claims or for windshield glass,” and notes that these have risen from 4.5 percent in 2013 to 12.3 percent in 2018, but does not show how many were related to auto glass and how many were related to water claims.
SB 122 has been placed on the Senate’s calendar for April 23. HB 7065 is under the review of the Senate’s Banking and Insurance Committee, having passed the House last week.
Click here for the full text of SB 122.
Click here for the full text of HB 7065.