Florida Legislature Passes Assignment of Benefits (“AOB”) Reform Bill

The Florida Legislature recently passed a bill which, if signed by Governor DeSantis, will impact contractors who perform work under an Assignment of Benefits (“AOB”). An AOB is a document, signed by a homeowner/policyholder that allows a third party (ie. contractor, roofer, water mitigation company, plumber etc.) to “stand in the shoes” of the insured and seek direct payment from the insurance company. The limitations of the bill are so restrictive that it will very likely eliminate the use of AOBs in Florida altogether.

Here are some of the highlights of the bill, which will take effect July 1, 2019 if signed by the Governor.

• If emergency services (ie. water mitigation) are performed under an assignment of benefits, payment by the insurance company is capped at the greater of $3,000 or 1% of the Coverage A limit under the policy.
• The Assignment of Benefits must include a provision that allows an insured/homeowner to rescind the agreement for the following reasons:

– Within 14 days after the execution of the document for any reason,

– At least 30 days after the date work on the property is scheduled to begin if the contractor has not substantially performed the work, or

– At least 30 days after the execution of the AOB if the agreement does not contain a commencement date and the contractor has not begun substantial work on the property.

• If the AOB is rescinded, the homeowner is responsible to pay for any work completed prior to the rescission.

• The Assignment of Benefits must contain an itemized estimate of the services to be performed by the contractor.

• Before a contractor may file suit against an insurer under an AOB, a pre-suit demand letter must be sent to the insurance company allowing 10 business days for the insurer to pay and avoid a lawsuit.

• The attorney fees that may be recovered when suit is filed by an AOB company are limited.