An appellate court in Florida has upheld the right of policyholders to assign their right to collect benefits from an insurance claim to contractors, reversing trial court rulings in favor of insurers.
The Florida 3rd District Court of Appeals ruled last month that an insurer cannot get around a century of case law by placing the assignment of benefits prohibition in the application for insurance instead of the policy. The appellate panel held that the application is part of the policy under Florida law, and courts have held since 1917 that an insurance contract cannot take away a policyholder’s right to assign benefits after a loss.
Samuel Alexander, who represented Extreme Emergency Fire & Water Restoration against Lloyd’s of London on appeal in the Florida case, said it was the latest attempt by the insurance industry “to get around established case law.”
“They tried to get the 3rd DCA, basically, to overrule the Florida Supreme Court,” he said during a telephone interview after the ruling.
Alexander, who owns the Alexander Appellate Law practice in the Orlando suburb of DeLand, said insurers may be emboldened because of numerous conservative appointments to the state supreme court in the past few years. He said the high court, however, has strict rules that will prevent it from hearing any appeal that would allow it to overturn past precedent without conflicting rulings from the appellate districts.
In Extreme Emergency’s case, Lloyd’s argued that it negotiated the language that bars assignments of benefit, which is why the language was placed in the application for insurance. The policyholder received a lower rate by agreeing to accept the restriction, the carrier said.
“This is pure freedom of contract case,” Appellate attorney Clinton D. Flagg told the 3rd DCA during oral arguments.
Chief Judge Kevin Emas responded that he couldn’t see how Lloyd’s argument would overturn long-standing precedent that prohibitions against assignment of benefits go against public policy.
“It seems to me the only difference is that the insurance company decided to give it a go to put it in the application instead of the policy,” he said.
Extreme Emergency billed Lloyd’s $18,458.39 for repairs made to Julio and Nora Lugones house in Homestead, Fla. Lloyd’s refused to pay, citing the anti-assignment agreement in the signed insurance application.
Miami-Dade County Circuit Court Judge Martin Zilber granted summary judgment in Lloyd’s favor. He accepted the insurer’s argument that its case is unique, relative to previous rulings that upheld policyholders’ right to assign benefits, because the parties had negotiated the provision.
The 3rd DCA reversed.
“Applying a century of well-established Florida law to this 2017 contract of insurance, the anti-assignment provision was ineffective to prevent or restrict the insured from making a post-loss assignment of the right to payment of a claim without the insurer’s consent, and the fact that the anti-assignment clause was placed in the application, rather than the policy itself, is immaterial,” the appellate panel said in an opinion written by Emas.
The case is Extreme Emergency Fire & Water Restoration LLC vs. Certain Underwriters at Lloyd’s of London.
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