Florida legislature fails to change how insurance companies assign benefits- for now
by Mark Nonni
An “assignment of benefits” is when an individual who is entitled to insurance coverage or benefit (like recovering for property damage), assigns or authorizes those benefits to go directly to a contractor or service provider who does the work. An example of where an assignment can be used in Florida is when a hurricane strikes and causes property damage to your home. The assignment of benefits system enables you to immediately hire contractors to mitigate the damage without having to pay them upfront, by giving them the authority to obtain payment directly from your homeowners’ insurance company.
This system has worked well for 100 years. But for the past three years, Florida legislators have tried- and so far failed- to pass legislation that would fundamentally change the assignment of benefits, and there’s no reason to think they won’t try again in 2018. A system that works for consumers and homeowners would be transformed into a system that puts homeowners and consumers at the mercy of insurers, by eliminating the ability to “assign” your insurance benefits to a contractor of any kind. Any change along the lines of the legislation recently proposed would have the effect of forcing homeowners to pay out of pocket for repairs, because contractors/vendors will not be willing to do the work without some hope of being able to secure payment after the job is done.
What the legislation hasn’t addressed in any of the failed bills is what will happen if the insurance carrier only wants to pay half the cost of the repairs– or even denies the claim outright. The legislation would have prevented the contractor/vendor from suing the insurance company to recover the repair costs and denied you, the property owner, the ability to empower the contractor/vendor to do so.
Changing an effective, consumer friendly, 100 year old system is bad for Florida, bad for consumers, bad for contractors, and bad for workers who put lives back together after a storm. Consumers dodged a bullet this year, but it seems likely Florida legislators will try again. We’ll be watching.