Florida Senate - 2019 CS for CS for CS for SB 122 By the Committees on Rules; Judiciary; and Banking and Insurance; and Senators Broxson, Hooper, Simmons, and Stewart 595-04573-19 2019122c3 1 A bill to be entitled 2 An act relating to insurance assignment agreements; 3 creating s. 627.7152, F.S.; providing definitions; 4 providing requirements and limitations for property 5 insurance assignment agreements; providing a burden of 6 proof; providing that an assignment agreement does not 7 affect managed repair arrangements under a property 8 insurance policy; providing that an assignment 9 agreement does not confer or create authority to 10 adjust, negotiate, or settle a claim without 11 authorization under part VI of chapter 626; providing 12 that an acceptance by an assignee of an assignment 13 agreement is a waiver by the assignee and its 14 subcontractors of certain claims against an insured; 15 specifying an insured’s payment obligations under an 16 assignment agreement; requiring notice of intent to 17 initiate litigation; specifying requirements for such 18 notice; requiring a written response to the notice of 19 intent to initiate litigation; specifying requirements 20 for such response; providing for an award of 21 reasonable attorney fees for certain claims arising 22 under an assignment agreement; providing for an award 23 of reasonable attorney fees following a voluntary 24 dismissal under certain circumstances; requiring the 25 court to stay proceedings under certain circumstances; 26 directing the Office of Insurance Regulation to 27 require insurers to report specified data; requiring 28 the Financial Services Commission to adopt rules; 29 providing applicability; creating s. 627.7153, F.S.; 30 defining the term “assignment agreement”; authorizing 31 insurers to make available property insurance policies 32 restricting the assignment of post-loss benefits under 33 certain conditions; requiring annual notice of 34 coverage options; requiring a written or electronic 35 waiver under certain circumstances; requiring the 36 office to approve a waiver form; providing 37 applicability; amending s. 627.422, F.S.; providing 38 that residential or commercial property insurance 39 policies may not prohibit the assignment of post-lost 40 benefits; providing an exception; prohibiting Citizens 41 Property Insurance Corporation from implementing rate 42 changes for certain policies; providing an exception; 43 requiring certain rate filings to include specified 44 information; requiring the corporation to inform 45 policyholders of certain information; providing 46 severability; providing an effective date. 47 48 Be It Enacted by the Legislature of the State of Florida: 49 50 Section 1. Section 627.7152, Florida Statutes, is created 51 to read: 52 627.7152 Assignment agreements.— 53 (1) As used in this section, the term: 54 (a) “Assignee” means a person who is assigned post-loss 55 benefits through an assignment agreement. 56 (b) “Assignment agreement” means any instrument by which 57 post-loss benefits under a residential property insurance policy 58 or commercial property insurance policy, as that term is defined 59 in s. 627.0625(1), are assigned or transferred, or acquired in 60 any manner, in whole or in part, to or from a person providing 61 services to protect, repair, restore, or replace property or to 62 mitigate against further damage to the property. 63 (c) “Assignor” means a person who assigns post-loss 64 benefits under a residential property insurance policy or 65 commercial property insurance policy to another person through 66 an assignment agreement. 67 (d) “Disputed amount” means the difference between the 68 assignee’s presuit settlement demand and the insurer’s presuit 69 settlement offer. 70 (e) “Judgment obtained” means damages recovered, if any, 71 but does not include any amount awarded for attorney fees, 72 costs, or interest. 73 (f) “Presuit settlement demand” means the demand made by 74 the assignee in the written notice of intent to initiate 75 litigation as required by paragraph (9)(a). 76 (g) “Presuit settlement offer” means the offer made by the 77 insurer in its written response to the notice of intent to 78 initiate litigation as required by paragraph (9)(b). 79 (2)(a) An assignment agreement must: 80 1. Be in writing and executed by and between the assignor 81 and the assignee. 82 2. Contain a provision that allows the assignor to rescind 83 the assignment agreement without a penalty or fee by submitting 84 a written notice of rescission signed by the assignor to the 85 assignee within 14 days after the execution of the agreement, at 86 least 30 days after the date work on the property is scheduled 87 to commence if the assignee has not substantially performed, or 88 at least 30 days after the execution of the agreement if the 89 agreement does not contain a commencement date and the assignee 90 has not begun substantial work on the property. 91 3. Contain a provision requiring the assignee to provide a 92 copy of the executed assignment agreement to the insurer within 93 3 business days after the date on which the assignment agreement 94 is executed or the date on which work begins, whichever is 95 earlier. Delivery of the copy of the assignment agreement to the 96 insurer may be made: 97 a. By personal service, overnight delivery, or electronic 98 transmission, with evidence of delivery in the form of a receipt 99 or other paper or electronic acknowledgement by the insurer; or 100 b. To the location designated for receipt of such 101 agreements as specified in the policy. 102 4. Contain a written, itemized, per-unit cost estimate of 103 the services to be performed by the assignee. 104 5. Relate only to work to be performed by the assignee for 105 services to protect, repair, restore, or replace a dwelling or 106 structure or to mitigate against further damage to such 107 property. 108 6. Contain the following notice in 18-point uppercase and 109 boldfaced type: 110 111 YOU ARE AGREEING TO GIVE UP CERTAIN RIGHTS YOU HAVE UNDER YOUR 112 INSURANCE POLICY TO A THIRD PARTY, WHICH MAY RESULT IN 113 LITIGATION AGAINST YOUR INSURER. PLEASE READ AND UNDERSTAND THIS 114 DOCUMENT BEFORE SIGNING IT. YOU HAVE THE RIGHT TO CANCEL THIS 115 AGREEMENT WITHOUT PENALTY WITHIN 14 DAYS AFTER THE DATE THIS 116 AGREEMENT IS EXECUTED, AT LEAST 30 DAYS AFTER THE DATE WORK ON 117 THE PROPERTY IS SCHEDULED TO COMMENCE IF THE ASSIGNEE HAS NOT 118 SUBSTANTIALLY PERFORMED, OR AT LEAST 30 DAYS AFTER THE EXECUTION 119 OF THE AGREEMENT IF THE AGREEMENT DOES NOT CONTAIN A 120 COMMENCEMENT DATE AND THE ASSIGNEE HAS NOT BEGUN SUBSTANTIAL 121 WORK ON THE PROPERTY. HOWEVER, YOU ARE OBLIGATED FOR PAYMENT OF 122 ANY CONTRACTED WORK PERFORMED BEFORE THE AGREEMENT IS RESCINDED. 123 THIS AGREEMENT DOES NOT CHANGE YOUR OBLIGATION TO PERFORM THE 124 DUTIES REQUIRED UNDER YOUR PROPERTY INSURANCE POLICY. 125 126 7. Contain a provision requiring the assignee to indemnify 127 and hold harmless the assignor from all liabilities, damages, 128 losses, and costs, including, but not limited to, attorney fees, 129 should the policy subject to the assignment agreement prohibit, 130 in whole or in part, the assignment of benefits. 131 (b) An assignment agreement may not contain: 132 1. A penalty or fee for rescission under subparagraph 133 (a)2.; 134 2. A check or mortgage processing fee; 135 3. A penalty or fee for cancellation of the agreement; or 136 4. An administrative fee. 137 (c) If an assignor acts under an urgent or emergency 138 circumstance to protect property from damage and executes an 139 assignment agreement to protect, repair, restore, or replace 140 property or to mitigate against further damage to the property, 141 an assignee may not receive an assignment of post-loss benefits 142 under a residential property insurance policy in excess of the 143 greater of $3,000 or 1 percent of the Coverage A limit under 144 such policy. For purposes of this paragraph, the term “urgent or 145 emergency circumstance” means a situation in which a loss to 146 property, if not addressed immediately, will result in 147 additional damage until measures are completed to prevent such 148 damage. 149 (d) An assignment agreement that does not comply with this 150 subsection is invalid and unenforceable. 151 (3) In a claim arising under an assignment agreement, an 152 assignee has the burden to demonstrate that the insurer is not 153 prejudiced by the assignee’s failure to: 154 (a) Maintain records of all services provided under the 155 assignment agreement. 156 (b) Cooperate with the insurer in the claim investigation. 157 (c) Provide the insurer with requested records and 158 documents related to the services provided, and permit the 159 insurer to make copies of such records and documents. 160 (d) Deliver a copy of the executed assignment agreement to 161 the insurer within 3 business days after executing the 162 assignment agreement or work has begun, whichever is earlier. 163 (4) An assignee: 164 (a) Must provide the assignor with accurate and up-to-date 165 revised estimates of the scope of work to be performed as 166 supplemental or additional repairs are required. 167 (b) Must perform the work in accordance with accepted 168 industry standards. 169 (c) May not seek payment from the assignor exceeding the 170 applicable deductible under the policy unless the assignor has 171 chosen to have additional work performed at the assignor’s own 172 expense. 173 (d) Must, as a condition precedent to filing suit under the 174 policy, and, if required by the insurer, submit to examinations 175 under oath and recorded statements conducted by the insurer or 176 the insurer’s representative that are reasonably necessary, 177 based on the scope of the work and the complexity of the claim, 178 which examinations and recorded statements must be limited to 179 matters related to the services provided, the cost of the 180 services, and the assignment agreement. 181 (e) Must, as a condition precedent to filing suit under the 182 policy, and, if required by the insurer, participate in 183 appraisal or other alternative dispute resolution methods in 184 accordance with the terms of the policy. 185 (5) An assignment agreement and this section do not modify 186 or eliminate any term, condition, or defense relating to any 187 managed repair arrangement provided in the policy. 188 (6) An assignment agreement does not transfer or create any 189 authority to adjust, negotiate, or settle any portion of a claim 190 to a person or entity not authorized to adjust, negotiate, or 191 settle a claim on behalf of an assignor or a claimant under part 192 VI of chapter 626. 193 (7)(a) Notwithstanding any other provision of law, and 194 except as provided in paragraph (b), acceptance by an assignee 195 of an assignment agreement is a waiver by the assignee and its 196 subcontractors of claims against a named insured for payments 197 arising from the assignment agreement. The assignee and its 198 subcontractors may not collect or attempt to collect money from 199 an insured, maintain any action at law against an insured, claim 200 a lien on the real property of an insured, or report an insured 201 to a credit agency for payments arising from the assignment 202 agreement. Such waiver remains in effect after the assignment 203 agreement is rescinded by the assignor or after a determination 204 that the assignment agreement is invalid. 205 (b) A named insured is responsible for the payment of all 206 of the following: 207 1. Any deductible amount due under the policy. 208 2. Any betterment ordered and performed that is approved by 209 the named insured. 210 3. Any contracted work performed before the assignment 211 agreement is rescinded. 212 (8) The assignee shall indemnify and hold harmless the 213 assignor from all liabilities, damages, losses, and costs, 214 including, but not limited to, attorney fees, should the policy 215 subject to the assignment agreement prohibit, in whole or in 216 part, the assignment of benefits. 217 (9)(a) An assignee must provide the named insured, insurer, 218 and the assignor, if not the named insured, with a written 219 notice of intent to initiate litigation before filing suit under 220 the policy. Such notice must be served by certified mail, return 221 receipt requested, or electronic delivery at least 10 business 222 days before filing suit, but may not be served before the 223 insurer has made a determination of coverage under s. 627.70131. 224 The notice must specify the damages in dispute, the amount 225 claimed, and a presuit settlement demand. Concurrent with the 226 notice, and as a precondition to filing suit, the assignee must 227 provide the named insured, insurer, and the assignor, if not the 228 named insured, a detailed written invoice or estimate of 229 services, including itemized information on equipment, 230 materials, and supplies; the number of labor hours; and, in the 231 case of work performed, proof that the work has been performed 232 in accordance with accepted industry standards. 233 (b) An insurer must respond in writing to the notice within 234 10 business days after receiving the notice specified in 235 paragraph (a) by making a presuit settlement offer or requiring 236 the assignee to participate in appraisal or other method of 237 alternative dispute resolution under the policy. An insurer must 238 have a procedure for the prompt investigation, review, and 239 evaluation of the dispute stated in the notice and must 240 investigate each claim contained in the notice in accordance 241 with the Florida Insurance Code. 242 (10) Notwithstanding any other provision of law, in a suit 243 related to an assignment agreement for post-loss claims arising 244 under a residential or commercial property insurance policy, 245 attorney fees and costs may be recovered by an assignee only 246 under s. 57.105 and this subsection. 247 (a) If the difference between the judgment obtained by the 248 assignee and the presuit settlement offer is: 249 1. Less than 25 percent of the disputed amount, the insurer 250 is entitled to an award of reasonable attorney fees. 251 2. At least 25 percent but less than 50 percent of the 252 disputed amount, no party is entitled to an award of attorney 253 fees. 254 3. At least 50 percent of the disputed amount, the assignee 255 is entitled to an award of reasonable attorney fees. 256 (b) If the insurer fails to inspect the property or provide 257 written or oral authorization for repairs within 7 calendar days 258 after the first notice of loss, the insurer waives its right to 259 an award of attorney fees under this subsection. If the failure 260 to inspect the property or provide written or oral authorization 261 for repairs is the result of an event for which the Governor had 262 declared a state of emergency under s. 252.36, factors beyond 263 the control of the insurer which reasonably prevented an 264 inspection or written or oral authorization for repairs, or the 265 named insured’s failure or inability to allow an inspection of 266 the property after a request by the insurer, the insurer does 267 not waive its right to an award of attorney fees under this 268 subsection. 269 (c) If an assignee commences an action in any court of this 270 state based upon or including the same claim against the same 271 adverse party that such assignee has previously voluntarily 272 dismissed in a court of this state, the court may order the 273 assignee to pay the attorney fees and costs of the adverse party 274 resulting from the action previously voluntarily dismissed. The 275 court shall stay the proceedings in the subsequent action until 276 the assignee has complied with the order. 277 (11) This section does not apply to: 278 (a) An assignment, transfer, or conveyance granted to a 279 subsequent purchaser of the property with an insurable interest 280 in the property following a loss; 281 (b) A power of attorney under chapter 709 that grants to a 282 management company, family member, guardian, or similarly 283 situated person of an insured the authority to act on behalf of 284 an insured as it relates to a property insurance claim; or 285 (c) Liability coverage under a property insurance policy. 286 (12) The office shall require each insurer to report by 287 January 30, 2022, and each year thereafter data on each 288 residential and commercial property insurance claim paid in the 289 prior calendar year under an assignment agreement. The Financial 290 Services Commission shall adopt by rule a list of the data 291 required, which must include specific data about claims 292 adjustment and settlement timeframes and trends, grouped by 293 whether litigated or not litigated and by loss adjustment 294 expenses. 295 (13) This section applies to an assignment agreement 296 executed on or after July 1, 2019. 297 Section 2. Section 627.7153, Florida Statutes, is created 298 to read: 299 627.7153 Policies restricting assignment of post-loss 300 benefits under a property insurance policy.— 301 (1) As used in this section, the term “assignment 302 agreement” has the same meaning as provided in s. 627.7152. 303 (2) An insurer may make available a policy that restricts 304 in whole or in part an insured’s right to execute an assignment 305 agreement only if all of the following conditions are met: 306 (a) The insurer makes available to the insured or potential 307 insured at the same time the same coverage under a policy that 308 does not restrict the right to execute an assignment agreement. 309 (b) Each restricted policy is available at a lower cost 310 than the unrestricted policy. 311 (c) The policy prohibiting assignment in whole is available 312 at a lower cost than any policy prohibiting assignment in part. 313 (d) Each restricted policy include on its face the 314 following notice in 18-point uppercase and boldfaced type: 315 316 THIS POLICY DOES NOT ALLOW THE UNRESTRICTED ASSIGNMENT OF POST 317 LOSS INSURANCE BENEFITS. BY SELECTING THIS POLICY, YOU WAIVE 318 YOUR RIGHT TO FREELY ASSIGN OR TRANSFER THE POST-LOSS PROPERTY 319 INSURANCE BENEFITS AVAILABLE UNDER THIS POLICY TO A THIRD PARTY 320 OR TO OTHERWISE FREELY ENTER INTO AN ASSIGNMENT AGREEMENT AS THE 321 TERM IS DEFINED IN SECTION 627.7152 OF THE FLORIDA STATUTES. 322 323 (3) The insurer shall notify the insured at least annually 324 of the coverage options the insurer makes available under this 325 section. Such notice must be part of and attached to the notice 326 of premium. 327 (4) A named insured must reject a fully assignable policy 328 in writing or electronically. The rejection of a fully 329 assignable policy shall be made on a form approved by the 330 office. The form must state that the policy restricts the 331 assignment of benefits. The heading of the form shall be in 18 332 point uppercase and boldfaced type and state: 333 334 YOU ARE ELECTING TO PURCHASE AN INSURANCE POLICY THAT RESTRICTS 335 THE ASSIGNMENT OF BENEFITS UNDER THE POLICY IN WHOLE OR IN PART. 336 PLEASE READ CAREFULLY. 337 338 (5) This section applies to a policy issued or renewed on 339 or after July 1, 2019. 340 Section 3. Section 627.422, Florida Statutes, is amended to 341 read: 342 627.422 Assignment of policies or post-loss benefits.—A 343 policy may be assignable, or not assignable, as provided by its 344 terms. Any such assignment shall entitle the insurer to deal 345 with the assignee as the owner or pledgee of the policy in 346 accordance with the terms of the assignment, until the insurer 347 has received at its home office written notice of termination of 348 the assignment or pledge or written notice by or on behalf of 349 some other person claiming some interest in the policy in 350 conflict with the assignment. 351 (1) LIFE OR HEALTH INSURANCE POLICIES.—Subject to its terms 352 relating to assignability, any life or health insurance policy 353 under the terms of which the beneficiary may be changed upon the 354 sole request of the policyowner may be assigned either by pledge 355 or transfer of title, by an assignment executed by the 356 policyowner alone and delivered to the insurer, whether or not 357 the pledgee or assignee is the insurer.Any such assignment358shall entitle the insurer to deal with the assignee as the owner359or pledgee of the policy in accordance with the terms of the360assignment, until the insurer has received at its home office361written notice of termination of the assignment or pledge or362written notice by or on behalf of some other person claiming363some interest in the policy in conflict with the assignment.364 (2) POST-LOSS BENEFITS UNDER CERTAIN PROPERTY INSURANCE 365 POLICIES.—A residential or commercial property insurance policy 366 may not prohibit the assignment of post-loss benefits unless it 367 complies with s. 627.7153. 368 Section 4. Citizens Property Insurance Corporation may not 369 implement rate changes in 2019 for DP-3 and HO-3 policies unless 370 the rate filing reflects projected rate savings from this act. 371 Such rate filing must include an exhibit demonstrating the 372 impact of this act on indicated rates for DP-3 and HO-3 373 policies. Citizens Property Insurance Corporation shall provide 374 policyholders with details on the projected rate savings from 375 this act. 376 Section 5. If any provision of this act or its application 377 to any person or circumstance is held invalid, the invalidity 378 does not affect the remaining provisions or applications of the 379 act which can be given effect without the invalid provision or 380 application, and to this end the provisions of this act are 381 severable. 382 Section 6. This act shall take effect July 1, 2019.