“Partial Assignments” can be Fatal for Restoration Contractors’ Attempts to Collect Insurance Payments, and Increase Liability for Insureds

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Homeowners and restoration contractors who attempt to enter into a partial assignment of insurance benefits should know that partial assignments for the contractor’s services have repeatedly been found to be invalid contracts in Florida courts.  An invalid assignment contract typically results in the homeowner remaining 100% responsible for paying the contractor for the services performed on the home.  This is because the insurance company is not required to honor true partial assignments and courts will not enforce an invalid contract.

Sometimes insurance companies will say that a valid, complete assignment is just a “partial assignment” because the insurance company thinks both the policyholder and the contractor are trying to collect payment for the services the contractor performed.  However, this is not what either the policyholder or the contractor intended in the assignment of benefits.  Once the policyholder assigns the rights and benefits to the contractor to allow direct billing and collect payment for the services the contractor performed, the policyholder no longer has any rights or interest in collecting payment for services performed by that contractor.  The policyholder transferred those rights and interests to the contractor, so only the contractor is entitled to collect insurance payment for their invoice.

The assignment of benefits should state that the policyholder assigns and transfers “any and all insurance rights, benefits and proceeds under any applicable insurance policy” to the restoration contractor.  It should be clear that the policyholder has made a complete assignment of benefits to the contractor and not a partial assignment.  This is because Florida courts have held that only one entity “owns” the cause of action against an insurer at any one time and the one that owns the claim must bring the action if an action is to be brought.  The reasoning is that in the case of a partial assignment, if both the policyholder and the contractor own the rights to collect payment for the contractor’s services, the insurance company is subject to multiple suits or claims for the same amount due.

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Slide from Cohen Battisti’s “Insider Secrets” Slideshow

In a typical property damage insurance claim where a policyholder hires a contractor, the policyholder may assign and transfer the rights and benefits to collect payment for its services to the contractor in exchange for the contractor not requiring immediate payment from the policyholder at the time services are provided.  The policyholder still remains responsible for amounts owed that the insurance company does not pay in benefits.  Once the assignment takes place, the contractor owns the claim only for the value of the services they performed, and has the policyholder’s permission to directly bill the insurance company for payment of these services.

If an insurance company does not issue full payment to the contractor for its services performed after receiving a proper assignment of benefits and the contractor’s invoice, and after certain conditions are met, the contractor can proceed to collect payment directly from the insurance carrier, and if that fails, then to file suit against the insurance company.

The bottom line is that with a complete assignment of insurance benefits given to a contractor for collecting payment for services they performed, the contractor is the only owner of the claim for their services rendered.  It is important to avoid partial assignments because it may not be found valid and may not be enforced in a court of law.  Moreover, with a complete assignment given to a contractor for services rendered, the policyholder still, always maintains the rights to collect benefits for any damages they have which are not related to the contractor’s services performed.  The list is long but can for example include payments for additional or supplemental property damage that needs repairs in the same claim, or for additional living expenses.

If you have any questions about an Assignment of Benefits or partial assignments, consult a licensed Florida attorney.  At Cohen Battisti, we handle these assignment issues every day regarding insurance disputes and want to help you get paid.

Florida Enjoys 8th Year with No Hurricanes, but no Break for Homeowners Insurance

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Florida has survived some of the biggest hurricanes in U.S. history, but this year marks a record eight hurricane-free seasons.  No one seems to be enjoying this good fortune more than Florida property insurance carriers.

Despite escaping payment for hurricane claims for the last eight years and a 20 percent reduction in the cost of reinsurance this year, 69 percent of the rate requests that insurance companies filed with Florida Office of Insurance Regulation (OIR) were for rate increases.

State Farm, for one, hiked its rates by 6.3 percent in October although in the third quarter it reported $126 million in underwriting profits.  State Farm says it uses its rate increases to purchase additional reinsurance.  According to state regulators, Florida insurance companies must maintain all appropriate insolvency standards.  Why continue to raise premiums to cushion reinsurance reserves that already exist instead of passing on savings to policyholders?

Florida’s Chief Financial Officer, Jeff Atwater, requested answers from state Insurance Commissioner, Kevin McCarty on why homeowner insurance rates have not seen a reduction, generally, when costs to insurance companies have gone down.  McCarty’s report was due to be released on Dec. 18, but he asked for an extension until Jan. 15.

Not only are Floridians paying more in premiums when there have been no major storms, they are paying the highest rates in the country.  A recent report by the National Associate of Insurance Commissioners (NAIC) showed that the average rate for a Florida homeowner’s insurance policy is $1,933.  Louisiana is the second-highest, with an average $1,672.  The national average rate is $978.

The NAIC’s annual report contains insurance rates from 2011, which was the most recent year with data available.  Notably, the average rates do not reflect the more recent insurance increases Floridians faced in the last two years.  The trend of state regulators consistently approving rate hikes does not show signs of slowing down.

Floridians Face Surging Rate Hikes in National Flood Insurance Program

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The National Flood Insurance Program (NFIP), which is supervised by the Federal Emergency Management Agency, is set to increase premiums in 2014.  The cost is steep for Florida, which holds 37 percent of the federal flood insurance program’s policies.

Homeowners who are renewing their insurance face skyrocketing premiums, up to 20 percent in communities like Pinellas County.  he high premiums are a result of changes to the NFIP, being implemented by the Biggert-Waters Flood Insurance Reform Act.

With Florida having more coastline than any state, Floridians have more flood policies and pay more into the program.  The flood insurance rate increases affect Florida home sales and other title transfers. Although Florida theoretically stands the highest chance of flooding, Hurricane Katrina and Superstorm Sandy led to more NFIP claims being made in other states than Florida.  Not only does Florida have the highest number of subsidized flood insurance policies, it is the state with the highest exposure to pay into claims, at $475 billion.  Texas and Louisiana have the second and third highest exposure, at $162 billion and $112 billion, respectively.

ImageCourtesy of NRDC

According to a recent report by the Center for Competitive Florida, which analyzes the changes in the NFIP, Superstorm Sandy claims were estimated at up to $15 billion.  Comparatively, Florida had $407 million in Tropical Storm Isaac claims in 2012.

Another study, conducted by the Wharton Center for Risk Management and Decision Processes, compared the amount of claims paid to the amount of premiums collected and revealed that Florida paid $3.60 for every dollar NFIP paid in a flood claim anywhere.  The study showed that 11 states received more in payouts than was paid in premiums by the states’ policyholders over the course of 30 years.

Currently, the NFIP is $24 billion in debt. Thus, Congress passed the Flood Insurance Reform Act.  The goal of the reforms is to reduce the debt by eliminating subsidized rates on older homes that don’t represent the properties’ true flood risk, and make the program more stable.  Previously, rate increases were capped at 10 percent, but some Floridians risk paying four or six times their current rate, or even more.

Florida legislators are attempting to get a delay or roll back of the new rates passed before the session closes for the year, but Congress has yet to agree to delay any changes to the implementation of the Biggert-Waters Flood Insurance Reform Act.

Itsaboutjustice.law

Hurricane Sandy – One Year Later

Hurricane season 2013 continues to roll on.  However, today’s date marks a tragic event in hurricane history.  Today, October 29, 2013, is the one-year anniversary of Hurricane Sandy: the super storm the rocked the North East.

Not only were billions of dollars worth of damage and some 366,000 structures damaged during the storm, but an estimated 160 people in the United States lost their lives.  Many more lost their homes.  Today, there are still thousands of people who are still trying to get back to what they called home.

If you are in the restoration industry, you know it may be extremely difficult to get insurance companies to pay out during tragic events such as this.  In the state of Florida, law firms such as Cohen Battisti, Attorneys at Law know this well, and are here to make sure that insurance companies pay you (the restoration company) for the work you’ve done.

The Huffington Post has a great article featuring interactive before (destruction) and after (reconstruction) pictures with a slider to go back and forth between the images.  This is a screen shot of one of them.

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Courtesy of the Huffington Post

Reports say that Hurricane Sandy was the deadliest US cyclone outside of the southern states since Hurricane Agnes of 1972.  The National Hurricane Center said the Sandy ranks of the second-costliest tropical cyclone on record, after Hurricane Katrina of 2005.

Hurricanes cannot be prevented, but you can prepare for them.  During hurricane season, always make sure that you have, and follow a hurricane checklist of some sort.  If you are a restoration company, make sure you get paid for your work by using an Assignment of Benefits contract.  Experienced law firms such as Cohen Battisti, Attorneys at Law are able to help you with this.

The North East took a hard hit, but they are getting back on their feet.  The battle still isn’t over though.

How to get an Attorney for Free!

There are a lot of times where you might not want to hire an attorney because it may cost you too much.  There are other times where you might hire an attorney and if your case prevails, a large some of your money goes to the attorney to cover the fees and costs.  This can be quite frustrating.  Ever wonder what areas of Law are covered by the other party at fault?  Well, in the state of Florida, there are some very consumer friendly statutes.

If you are a Restoration Company:

In the state of Florida there is a statute (Florida Statute 627.428) known as the “fee shifting statute”.  This is used when an insurance carrier denies a claim and the restoration company does not get paid for the work they performed. The “fee shifting statute” allows the company to hire an attorney to collect the money and the attorney collects the fees and costs separately from the insurance company if the case is successfully resolved in favor of the restoration company.

What does this mean?  Say you are owed $10,000 for your work.  An experienced attorney such as Cohen Battisti, Attorneys at Law, will attempt to collect the $10,000 dollars that you are owed from the insurance company.  After that, the attorney(s) will then acquire the attorneys’ fees and cost separately from the insurance carrier.  In most cases, you will never have to pay anything to the attorney, and the attorney will not charge a percentage from the money collected. Continue reading

Press Release – The Time to Organize is Now!

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FOR IMMEDIATE RELEASE: February 27, 2013

House Bill 909 (2013) may affect home owners and Florida restoration contractors

The time to act is now! Florida’s restoration industry will unite against HB 909 (2013)

Orlando, Florida, February 27, 2013 – Cohen Battisti Attorneys is joining with the restoration industry and Florida Justice Associations in an attempt to defeat HB 909 (2013). This bill would prohibit assignments under homeowner’s policies. This would be a major blow to the industry and completely give all the power back to the insurance companies. For instance, a restoration company will no longer be protected against insurance companies for jobs that have been performed without being paid up-front. No restoration company will want to do these jobs for free because without an assignment of benefits restorers have no protection. Therefore, if a hurricane were to hit the state of Florida, all the homes that are damaged will go un-repaired until restoration companies receive payment upfront. After that, the damage will be so extensive, insurance companies will deny claims and all the homeowners in Florida will be in a much worse position.

The time to organize is now! Homeowners and the restoration industry should contact their local representatives and tell them how this bill will negatively affect their businesses and homes.

http://www.myfloridahouse.gov/Sections/Representatives/representatives.aspx

For more information about House Bill 909 (2013) please contact Cohen Battisti Attorneys at (407) 478-4878.

Contact Information: 

Carol M. Palacio

Carol@CohenBattisti.com
Cohen Battisti Attorneys at Law
1211 Orange Avenue Winter Park, FL 32789
(407) 478-4878
www.CohenBattisti.com

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