Fifth District Upholds Assignment of Benefits
The Fifth District Court of Appeal upheld an assignment of benefits against a claim that the assignee lacked an insurable interest. In Accident Cleaners, Inc. v. Universal Insurance Company of North America, the Fifth District reviewed a trial court’s dismissal of Accident Cleaners’ complaint against the insurer. Accident Cleaners took an assignment of rights under a homeowners insurance policy when the policyholder retained it to perform emergency cleanup and restoration services at a home. Accident Cleaners submitted invoices for its services, but the insurer refused to pay the full amount and litigation ensued.
The trial court dismissed Accident Cleaners’ suit when it found that in accordance with Section 627.405, Florida Statutes, an assignee must have had an insurable interest in the property at the time of loss. However, the Fifth District disagreed, stating that a strict construction of Section 627.405 does not require a post-loss assignee to have had an insurable interest at the time of loss. The court reversed the trial court’s dismissal and remanded the case for reinstatement of the complaint.
The insurer argued in the appeal that only a person with an insurable interest at the time of loss can enforce the terms of the insurance policy. However, the court disagreed and stated that the insurer’s argument ignores that an insured’s contractual rights are freely assignable and that assignees have a common law right to sue. The court also observed that the public policy behind the insurable interest requirement is to distinguish insurance contracts from contracts that otherwise essentially would constitute wagering. The court reasoned that post-loss assignments do not violate this public policy when the policyholder had an insurable interest at the time of loss.