This past spring, the insurance and banking lobbies created quite a stir in the water and fire damage mitigation and restoration industry. During March and April, water mitigation contractors and restoration companies in Florida experienced a sharp sense of panic, inundated their construction attorneys with emails and telephone calls, and organized to participate in the Florida legislative process. Why? Simply stated: Florida House Bill HB 909 (2013). HB 909 was filed on February 13, 2013 by Representative John Wood, and was referred on as favorable by the House’s Insurance and Banking Subcommittee and Regulatory Affairs Committee.
So what created the stir? If passed, the following provision would have been added to section 627.422, Florida Statutes:
Any homeowner’s insurance policy may prohibit the assignment of rights or benefits under the policy, and a third-party beneficiary may not accept an assignment or recover against any policy that prohibits assignment. Any assignment of rights or benefits under a homeowner’s policy that prohibits assignment renders the coverage void.
The typical practice of many water mitigation and restoration companies is to include assignments of insurance benefits in their standard contracts so that they can step in to the shoes of their customers and pursue homeowners’ claims as an assignee of the homeowners. The practice developed because homeowners generally have fewer resources and more difficulty pursuing claims that have been denied by their homeowner’s insurance companies after experiencing water and fire damage.
Had HB 909 passed and become law, it would have required significant changes to the water and fire damage restoration industry in Florida. Much to the relief of water mitigation contractors and restoration companies, HB 909 died in the Florida House of Representatives on May 3, 2013, and assignments of homeowner’s insurance benefits will continue to be prevalent in residential damage mitigation and restoration contracts in the foreseeable future. For now, at least, mitigation and restoration contractors can breathe a sigh of relief.
But whether the assignment supports the objective of the mitigation or restoration company is a matter of interpreting the homeowner’s insurance policy. We will address this question and the steps available to one of these companies to protect themselves in a future post.