Governor Signs AOB Reform Bill
Governor Ron DeSantis has signed HB 7065 reforming the use of assignments in Florida’s property insurance market. He also signed HB 337 relating to Florida’s court system and also accelerating the effective date of HB 7065’s attorney’s fee revisions. Most of the law changes relating to assignments of benefits (AOB) take effect July 1. However, a new process for determining attorney’s fee awards takes effect immediately.
The legislature passed HB 7065 after considerable debate during the 2019 regular session. The bill attempts to address abuses with assignments of benefits under insurance policies, particularly including rights to attorney’s fees when litigation arises under property insurance claims. AOB abuses have resulted in increased litigation in Florida, with rising costs ultimately making their way into property insurance rates.
The new law creates new standards for assignment agreements. This includes requiring vendors to provide itemized estimates of the repairs subject to the assignments. In emergency situations, assignments are limited to $3,000 or 1% of the Coverage A amount.
The new law also eliminates Florida’s one-way attorney’s fee statute in assignment settings. A new process provides for the vendor to make a written demand and the insurer to respond with a written offer. Depending on the amount of the final judgment in comparison to the offer and the demand, the vendor or the insurer might be eligible to recover its fees or potentially neither party will be entitled to fees.
The new law also will allow, but not require, insurers to offer policies that limit assignments. An insurer choosing to do so must also continue to offer a version of the policy that does not limit assignments. A policy limiting assignments must cost less than a comparable policy that does not limit assignments.
Citizens Property Insurance Corporation is required to take the new law’s provisions into account before implementing its 2019 rate filing. This will provide an early look at the estimated impacts of the reforms. Of course, the actual impacts will become known only as the new provisions are applied to claims arising in the months and years following the July 1 effective date.