Dismissal of AOB Case Leaves Unanswered Questions
The Florida Supreme Court recently decided by a 4-3 vote to dismiss its review of Restoration 1 of Port St. Lucie v. Ark Royal Insurance Company. Interestingly, the three justices in the minority were Governor DeSantis’ recent appointees. The majority was comprised of four justices who were on the court when it accepted the case.
The court attributed its decision to the 2019 legislature’s passing of HB 7065 to address certain abuses related to assignments of benefits. Stated most simply, one can view the Ark Royal case as relating to an insurer’s ability to restrict assignments. The Supreme Court observed this is no longer an open question because HB 7065 specifically allows insurers to restrict assignments.
However, Ark Royal actually presented broader questions that now will go unresolved. From an insurer’s point of view, Ark Royal did not involve a prohibition on assignments. Instead, the insurer merely required the consent of all insureds and interests under the policies (including mortgagees) in order for an assignment to be effective. Florida’s 4th DCA found this was not an unlawful prohibition on assignments. Rather, the court found this was a permissible condition on a policy term.
The 4th DCA’s decision in Ark Royal conflicted with another appellate decision in Security First Insurance Company v. Office of Insurance Regulation. In Security First, the Office of Insurance Regulation disapproved an insurer’s forms that would have imposed similar conditions on assignments. The OIR’s disapproval was upheld on appeal. The Ark Royal case before the Supreme Court therefore could have addressed more than the narrow issue of whether an insurer can prohibit assignments. The case instead could have resolved a conflict as to the permissible scope of policy conditions when those conditions affect, but do not preclude, assignments.
Insurers will implement the new provisions of HB 7065 over the coming months and years. In the absence of a substantive resolution of Ark Royal, insurers unfortunately must do so without additional guidance as to whether certain policy conditions do or do not constitute restrictions on assignments.