Florida Legislature Passes AOB Reform Bill

By Mario E. Lopez, Esq. 

Imagine you wake up for a late-night snack and as you make your way downstairs you realize that your kitchen is now inundated with water. After further inspection, you realize that the flooding was caused by a burst water pipe in your downstairs bathroom. As you stare at your flooded kitchen floor, you wonder what to do next. If you find yourself in this unfortunate situation, you are likely to hire someone to extract the water and dry out the flooded area to prevent any further damage or even worse, mold formation.

If you can’t afford to pay upfront for the remediation costs, it is common practice among many restoration contractors to require homeowners to sign an assignment of benefits or “AOB” as it is commonly referred to in the insurance industry. For several years, the insurance industry has attempted, unsuccessfully, to limit the use of assignments of benefits. Last week, however, the Florida Legislature passed HB 7065 and Gov. Ron DeSantis signed the new bill into law thereafter. The reforms will go into effect on July 1, 2019.

What is an Assignment of Benefits or “AOB”?

In recent years, AOBs have become common in property insurance claims, where an insured property owner assigns his or her benefits under a property insurance policy to a contractor, water remediation company, or other vendor who repairs the damaged property and bills the insurer for the work. When a homeowner assigns an insurance policy, the homeowner assigns all interest in the contract to the assignee or contractor. As a result, the service provider obtains a right to bill your insurer directly and pursue legal action if necessary. For homeowners, AOBs are extremely helpful because it allows contractors to get paid promptly by home insurers without requiring the homeowner to pay out of pocket for the repairs. Opponents of AOBs claim that the rising number of AOB lawsuits filed in Florida result in higher insurance costs for all homeowners. However, not everyone agrees, Florida Senator Gary Farmer who opposes the bill says that the bill is mostly backed by the insurance industry and unfairly targets contractors throughout the state.

Summary of New AOB Reforms

  • The new law transfers duties under the insurance contract to the assignee or contractor in most cases, which, if not carried out, shift the burden to the assignee to prove why such a failure did not limit the insurer’s ability to perform under the contract.
  • Requires assignees to give insurers prior written notice of at least ten business days before filing suit on a claim.
  • Allows insurance companies to make available residential and commercial property insurance policies that are non-assignable at lower costs.

Reach Out to Us Today for Assistance

If you’re a homeowner or contractor and have questions regarding your rights and obligations under the new AOB reforms in Florida, contact one of the attorneys at Farrell, Patel, Jomarron & Lopez! We provide representation to clients facing a wide range of insurance claim issues. We can help make sure you understand the terms of your insurance policy and can educate you further on the Assignment of Benefits process.

Contact our law firm today at (305) 300-3000 for a free consultation!