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Insurance Coverage and Bad Faith

Fourth DCA’s Decision on Assignment of Benefits May be Beneficial to Insurance Carriers Seeking Compliance with Section 627.70152

Fourth DCA’s Decision on Assignment of Benefits May be Beneficial to Insurance Carriers Seeking Compliance with Section 627.70152

Section 627.7152, Florida Statutes went into effect on July 1, 2019 and regulates assignment of post-loss benefits agreements between an insured under a property insurance policy and any “person providing services to protect, repair, restore, or replace property or to mitigate against further damage to the property.” On April 20, 2022, the Fourth DCA issued a ruling in Total Care Restoration a/a/o Annie Griffiths v. Citizens Property Insurance Corporation holding that the Statute applies to all assignment agreements executed on or after July 1, 2019 irrespective of the policy period or date of loss.

The statute requires that an assignee provide notice of intent to initiate ligation to the insurer, the named insured, and the assignor at least ten (10) business days prior to filing suit. The notice must specify the amount of damages in dispute, include a detailed written invoice or estimate of services, and in the case of work performed, proof that the work has been performed in accordance with accepted industry standards. The Statute clearly states that the law applies to assignment agreements executed on or after July 1, 2019. However, assignees have argued that the statute cannot apply to assignments arising out of insurance policies issued before July 1, 2019.

In Total Care, the insured suffered a water loss on June 10, 2018, but waited until July 16, 2019 to execute an assignment agreement with Total Care Restoration. Total Care performed services at the property and claimed insurance benefits. Citizens denied the claim and Total Care filed suit without providing the requisite notice. Citizens moved for summary judgment arguing that Total Care was not in compliance with Section 627.7152 and Total Care, relying on Menendez v. Progressive Express Insurance Co., argued in response that the statute did not apply to its assignment as the insurance policy at issue was issued prior to the statute’s enactment. The trial court ruled in favor of Citizens and an appeal followed.

In affirming the trial Court’s decision, the Fourth DCA concluded that Menendez was inapplicable as it did not address the question presented, whether a subsequent contract, the assignment of benefits under an insurance policy, is subject to the notice requirements of an earlier enacted statute. As the statute was in effect at the time the assignment agreement was executed, the Court reasoned that the statute was not being applied retroactively. Further, Total Care did not have any interest in the claim until the assignment was executed, and could not rely on the issue date of the policy to state the statute was applied retroactively. Finally, the assignment itself tracked the language of the statute, showing Total Care acknowledged the statute’s application.

This decision may be beneficial to carriers seeking compliance with Section 627.70152, Florida Statutes, regarding the pre-suit notice required in an insured lawsuit. §627.70152 went into effect on July 1, 2021 and applies “exclusively to all suits not brought by an assignee arising under a residential or commercial property insurance policy…” Based on the Total Care decision, carriers can argue the notice requirement applies to any lawsuit filed after July 1, 2021 and, therefore, the issue of retroactive application is moot.