Can I sign over my homeowners insurance benefits to a contractor? (continued...)
We recently blogged about industry efforts to pass legislation that would stop insureds from signing over their insurance benefits to contractors. Such a practice is called "assignment."
Assignments are an important benefit for insureds in that they allow repairs on damaged property to go forward before claims are processed by and negotiated with insurance companies. Contractors accept the benefit of the insurance policy as compensation for their work. Insurance companies have resisted such a practice and thus far industry-supported legislation has not passed in Florida.
Without legislation to stop assignments, the law in Florida is that assignment of benefits from the insured to a contractor is valid. Florida courts have consistently held that an insurance company cannot use the assignment of insurance benefits to a contractor as an excuse to deny payment. This principle was affirmed in recent case, United Water Restoration v State Farm Florida.
The court ruled that a contractor who was assigned benefits from an insured can seek payment from the insurance company. In this case, the insured's home was destroyed by water in 2012. The insured hired a contractor to repair the damage, and as payment, assigned the benefits under the insurance policy to the contractor. The insurance company denied payment of the benefits to the contractor, claiming that the damage was consistent with mold and rot, conditions which were not covered by the policy. The insurance company further argued that the contractor was not entitled to payment because it was not the insured.
The court ruled against the insurance company, holding that the contractor does have a right to payment under the assignment. The court not only affirmed that assignments are valid, but held that it would be "unfair" to allow the insurance company to deny payment in this situation. Such a ruling is in line with prior decisions, which the court characterizes as "clearly established law."
Regardless, industry backed efforts to invalidate assignments will continue. Before considering whether to assign benefits to a contractor or to settle a claim with your insurance company, consult the experienced">property insurance attorneysat Pekar Law by calling (813)712-8762.