To assign or not to assign?
The burning question for aggrieved policyholders throughout Florida
By: Justin M. Thomas
Boyle, Gentile & Leonard, P.A.
Recently, Security First Insurance Company sought administrative
review of the Florida Office of Insurance Regulation’s (“OIR”) denial of requested
changes to their homeowner’s insurance policies issued in Florida, which
operated to prohibit post-lost assignments without the company’s approval. Security First Ins. Co. v. State of
Florida Office of Ins. Reg. 2015 WL 36446925 (Fla. 1st DCA June 22,
2015). The Court affirmed the decision
of the OIR relying primarily on the storied history of Florida jurisprudence
that approved of the exact conduct Security First sought to
eliminate.
On rehearing, Security urged the First District Court of Appeal to
certify conflict to the Florida Supreme Court.
Security First Ins. Co. v. State of Florida Office of Ins. Reg.
2015 WL 36446925 (Fla. 1st DCA October 26, 2015). The court declined this
request based on Florida’s existing authority that permits assignment of
post-loss rights. In doing so, however, the court acknowledged the existence of
a narrow statutorily imposed exception to this general rule with regard to
health insurance claims. In the
healthcare context, both Florida Courts and Legislature have acknowledged the
existence of significant public policy considerations require a prohibition on
the assignment of health care claims. The Security First Court, however,
recognized the distinction and elected not to extend the exception beyond the
health insurance arena.
The Security First holding is consistent with the recent Fifth District Court of Appeal of Accident
Cleaners, Inc. v. Universal Ins. Co. 2015 WL 1609973 (Fla. 5th DCA April
10, 2015), which also recognized approved of the assignability of post loss
claims. However, the Accident Cleaners Court went further in
acknowledging that assignees are not required to have an insurable interest at
the time of loss in order to sue the insurer. In doing so, the Accident
Cleaners Court pronounced Florida's long history in approving post loss
assignments of insurance rights and the entitlement of the assignee to enforce
the same:
[d]ating back to 1917, the Florida Supreme Court recognized that
provisions in insurance contracts requiring consent to assignment of the policy
do not apply to assignment after loss. W. Fla. Grocery Co. v. Teutonia Fire Ins. Co., 74 Fla. 220, 77 So. 209, 210–11 (1917); see Cont'l Cas. Co. v. Ryan Inc. E., 974 So. 2d 368, 377 n. 7 (Fla. 2008) (reaffirming the principle from W. Fla. Grocery Co. that the law is well-settled that
anti-assignment provisions do not apply after loss); Lexington Ins. Co. v. Simkins Indus., Inc., 704 So. 2d 1384, 1386
n. 3 (Fla.1998) (“[A]n
insured may assign insurance proceeds to a third party after a loss, even
without the consent of the insurer.” (citing Better Constr., Inc. v. Nat'l Union Fire
Ins. Co. of Pittsburgh, 651 So.2d 141, 142 (Fla. 3d DCA 1995)). Furthermore, the right to sue for a breach of contract to
enforce assigned rights was recognized early in Florida history. See Nationwide Mut. Fire Ins. Co. v. Pinnacle
Med., Inc., 753 So.2d 55, 57 (Fla.2000) (“The right of an assignee to sue for breach of contract to
enforce assigned rights predates the Florida Constitution.” (citing Robinson
v. Nix, 22 Fla. 321 (1886)).
Id. at 2. Interestingly, the utility of a
policyholder’s post-loss assignment of policy rights hinges on the ability to
enforce those acquired rights. This
importance is highlighted when an insured suffers a sudden loss from a covered
peril, such as damage to an insured home from a severe storm, and in turn is
able to use an assignment of rights under the policy to assign those rights to
a contractor, that will assist the policyholder in repairing the loss.
In
closing, Florida policyholders in accord with the decisions in Security
First and Accident Cleaners, may still employ the assignment of
post-loss rights under their insurance policies as an effective method to
resolve and recover from an insured loss.
Further, the foregoing decisions should provide comfort to assignees
with respect to the validity and enforceability of assigned post-loss policy
rights. Lastly, it should be noted that
the Court in Security First, unequivocally stated that the Florida
Legislature should consider, and if necessary address, the public policy
arguments raised by insurers—not the judiciary. . Only time will tell if
Florida’s Lawmakers accept the invitation.
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