To: Vicki Twogood, CPM
From: Kimberly A. Salmon, Esquire
Re: Homeowners’ Policy and Claims Bill of Rights Working Group
Date: July 16, 2013
Assignment of Insurance Benefits Issues:
1.
Contractors and Sub-Contractors adjusting claims and negotiating settlements. Fla. Stat.
§ 626.854(16); Fla. Stat § 626.8795; DFS Contractor Warning; DFS Consent Order and
Amended Consent Order. Conflict of Interest that is normally addressed in the Statute is circumvented by contractors through the use of the assignment.
2.
Unintended legal effect of executing the Assignment of Benefits: a.
Transfers ownership and all rights as to the entire claim, including the right to legal redress. Continental Casualty Ins. Co. v. Ryan, 974 So. 2d 369 (Fla. 2008).
3.
Contractors are filing suit to enforce payment under the policy of insurance in violation of Fla. Stat. § 627.405, requiring insurable interest to enforce a policy. With water damage claims, the result can be invasive testing, unnecessary destruction or tear-out, and over drying.
4.
Contractors are circumventing Fla. Stat. § 713.32. By using the assignment of benefits, contractors are permitted to avoid perfecting a lien and standing in line of priority in order to collect insurance benefits. The assignment provides a mechanism for circumventing other contractors with a priority interest as well as other third parties at interest, such as mortgagees. The assignment also circumvents the Chapter’s regulatory devices designed to protect homeowners, such as requiring proof of licensure, proof of a contract for repair, substantial performance of that contract, and penalty for inflated claims for payment.
5.
Homeowners are often provided with advice from the contractors about the legal affect of the assignment. This is the unauthorized practice of law and is often misleading to the
Homeowner.
6.
A Homeowner can unknowingly violate the mortgage agreement. Most standard
Mortgages contain a section requiring property insurance that gives a priority assignment of benefits to the mortgagee. The new assignment violates the terms of the agreement, subjecting the homeowner to penalties outlined in the Mortgage or liability for amounts improperly assigned.
7.
Homeowners are not being provided with statutory warnings required under 713.015 or notice of cancellation rights.
8.
Some of the assignment agreements contain unconscionable terms. Homeowners are executing assignments with 20% cancellation fees. If they decide not to use the

contractor before services begin, they are being threatened with a lawsuit and/or a lien if they decide to cancel the contract or withdraw the claim.
9.
Some contractors are providing the Homeowner with a “script” to read to the insurer when reporting the claim. Often these loss “facts” supplied by the contractor do not comport with the information later discovered. Homeowners may be making
“misrepresentations” that could affect coverage.