Since as early as 1893, Florida has recognized an insured’s ability to collect legal fees if they sue their insurance company and prevail. The reason for this is simple, if you pay premiums for insurance, your insurance company should be required to pay your legal fees and costs should it fail to properly indemnify you for a covered loss. Indemnification is the bedrock principal of insurance which requires an insurance company to indemnify its insured, to wit: putting the insured back in the exact same position he/she was in prior to the loss, no better, no worse.
In the name of claims abuses, Florida lawmakers are once again taking aim at those seeking to help insureds post-loss; namely, water extraction companies and the attorneys that represent them. Water extraction companies and others take an Assignment of Benefits from insureds to perform a specific scope of work with the understanding that it will be paid proceeds from an insureds’ policy of insurance. The reason for this is simplistic, an insured gets an immediate benefit, a dried-out home which lessens the extent of damage as well as dollar value of the claim for an insured/insurer, without the insured coming out-of-pocket personally or waiting for an insurance company to accept coverage and (some-day) make payment.
Since time is of the essence with water losses, any delay by the insurance company, either in investigation, late authorization of a water mitigation company to perform its work, or make/receive payment is prejudicial to an insured. In fact, more and more insurance companies are writing limitations and exclusions to prevent or limit these once covered loses and some are outright denying them despite no express provision in the policy excluding such losses. When a claim denial happens, water mitigation companies are not paid and some may turn to the insured to pay out-of-pocket or not collect at all. But, not to dry-out the home because an insured is waiting on an insurance company to authorize a water mitigation company (which may never come due to a claim denial or for other reason) increases the damage and the repairs/replacements he/she has to now pay out-of-pocket to fix the home which if not performed will result in an insurance company refusing to renew the policy.
Although Assignment of Benefits (“AOBs”) have been around for quite some time, lawmakers this time wish to curtail AOBs because statistically the value of these claims have increased and/or more attorneys, on behalf of AOBs, are filing lawsuits and recovering more indemnity benefits and attorneys’ fees and costs for failing to pay these benefits. Glaring absent from this analysis, is the age of the homes built in the 70s having cast iron pipes now breaking increasing in number of claims or that in litigation, an insurer voluntarily agrees to settle, paying additional indemnity benefits and fees/cost, without trial and/or if same is awarded by a fair and impartial jury, the insurer’s evaluation and/or payment was wrong.
Nevertheless, and as of February 17, 2017, Senators Hukill and Passidomo, with input from Citizens Property Insurance Corporation, have advanced Florida Senate Bill 1038. Its big selling point, among proponents of the bill, is that it will take away or limit incentives to file these claims; hence, creating a scenario that these water mitigation companies may not be able to obtain legal representation because the value of the claim on a contingent basis would not be cost-effective for an attorney to take. Giving its limiting effect, disrupting a fee provision in effect since 1893, I sincerely expect these lawmakers will have a very uphill battle getting this approved. If they do, however, the statute would become effective July 1, 2017.
If you wish to know more about your legal rights, the state of the law, or suspect that you are not being offered the full amount due on your claim or that your claim was improperly denied, contact the Farber Law Firm at 305-774-0134 for a free evaluation and consultation.