The Florida Fifth District Court of Appeal recently ruled in favor of American Integrity Insurance Company, affirming the trial court’s decision that invalidated an assignment of benefits (AOB) agreement. This case underscores the stringent requirements imposed by Florida law on post-loss insurance assignments and highlights the risks for policyholders and assignees who fail to comply with these regulations.
Case Background
When Leonard Caruso’s roof was damaged in 2019, he filed a claim with his insurer, American Integrity Insurance Company. Caruso directed the insurer to pay Noland's Roofing, the contractor he hired to repair the roof. Later, Caruso signed an assignment of benefits (AOB) agreement with Holding Insurance Companies Accountable, LLC (HICA), empowering HICA to enforce his insurance rights against American Integrity.
HICA sued American Integrity for breach of contract, alleging underpayment of Caruso’s claim. However, American Integrity argued that the assignment was invalid under section 627.7152, Florida Statutes, which governs AOB agreements. The trial court agreed, granting summary judgment for American Integrity, and HICA appealed.
The appellate court affirmed the trial court’s ruling, finding that HICA lacked standing to sue because the AOB agreement violated section 627.7152. Here’s why:
- Broad Definition of Assignment Agreements: Florida’s AOB statute applies to any agreement transferring post-loss insurance benefits to entities providing or facilitating repair services. Although HICA claimed it was not a contractor and therefore exempt, the court noted that HICA’s agreement required recovered funds to be used to pay Noland's Roofing, the contractor chosen by Caruso. This “mandatory passthrough” of benefits brought the agreement under the statute’s scope.
- Noncompliance with Statutory Requirements: Section 627.7152 outlines specific conditions for valid AOB agreements, including clear notice to the policyholder, specific terms, and compliance with timelines. HICA’s agreement failed to meet these standards, rendering it “invalid and unenforceable.”
- No Standing Without a Valid Assignment: Without a valid AOB agreement, HICA had no legal standing to sue American Integrity on Caruso’s behalf. The court reiterated that the statute’s requirements are not optional and must be strictly followed.
Key Takeaways
This case highlights the legal and procedural pitfalls of noncompliant AOB agreements. Here are three key lessons for policyholders, assignees, and insurers
- Understand the Scope of AOB Regulations: Florida’s AOB statute applies broadly to any agreement facilitating repairs or payment to contractors. Disguising or narrowly drafting the agreement will not exempt it from compliance if its purpose involves repair-related payments.
- Ensure Compliance with Statutory Requirements: Policyholders and assignees must ensure that AOB agreements meet the specific terms and conditions outlined in the statute. Failing to comply can result in invalid agreements and lost legal rights.
- Seek Professional Guidance: Navigating Florida’s complex insurance laws can be challenging. Both homeowners and assignees should consult legal counsel to ensure compliance and avoid costly litigation.
Final Thoughts
The decision in Holding Insurance Companies Accountable, LLC v. American Integrity reinforces Florida courts’ strict adherence to AOB regulations. For homeowners, this case serves as a reminder to understand their rights and obligations under insurance policies and state law. For contractors and assignees, it underscores the need for meticulous compliance when entering into agreements to recover insurance proceeds.
As Florida continues to grapple with issues of insurance fraud and compliance, this case offers valuable guidance for stakeholders across the insurance and construction industries.
Rosenthal Law Group is here to assist you for all your insurance litigation matters. You can reach us at www.rosenthalcounsel.com or (954) 384-9200.