AOB Reforms Take Effect
Many proposals that passed in the 2019 legislative session take effect July 1. This includes most portions of the Assignment of Benefits (AOB) reform bill passed by the legislature this year. Although the legislature passed other legislature accelerating the effective date of a new method for dealing with attorneys’ fees, the core portions of the new law dealing with AOB abuses take effect July 1.
The new law seeks to reduce abuses with AOB’s 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 adding to 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 AOB cases. 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