The Assignment of Benefits & Your Homeowners Claim
Posted on behalf of Gordon & Partners on Jul 23, 2013 in Insurance Claims
What rights does an insured have after assigning any and all insurance rights, benefits, and proceeds under the homeowners insurance policy to a third party?
Homeowners that have experienced the frustration of dealing with a loss to their home, whether by flood, fire or hurricane, can attest to the stressful nature of the re-building process. As soon as practical, the homeowner typically hires a disaster/mitigation crew, contractor, or other repair/mitigation service (hereafter collectively referred to as restoration service(s)).
Most of these restoration services require the homeowner to sign a document called an Assignment of Benefits, prior to commencing any work. Stuck with a limited amount of options and under great stress, the homeowner signs the Assignment of Benefits and the restoration work begins. This assignment essentially allows the restoration service company to perform its work on credit or with no immediate payment by the homeowner, leaving the homeowner with the comforting satisfaction that the restoration company will collect its fee for service from the homeowners insurance company directly.
A typical Assignment of Benefits states, in part, as follows:
I, the Owner/Agent for the job site listed below, authorize RESTORATION SERVICE to enter my property, furnish materials, supply all equipment and perform all labor necessary to preserve and protect my property from further damage.
Assignment of Insurance Benefits and Direct Payment Authorization:
I hereby assign any and all insurance rights, benefits, and proceeds under any applicable insurance policies to RESTORATION SERVICE. I also hereby authorize direct payment of any benefits or proceeds to RESTORATION SERVICE. I make this assignment and authorization in consideration of RESTORATION SERVICES agreement to perform services and supply materials and otherwise perform its obligations under this contract, including not requiring full payment at the time of service.
While it was most likely not the intent of the homeowner to assign all his or her rights to the restoration service, a plain reading of this sample Assignment of Benefits is leading insurance companies to argue that the homeowner has assigned any and all insurance rights, benefits, and proceeds under the applicable policy, including those available for the re-build of the home and under Coverages C and D, to the third party restoration service. Some insurers are taking the position that by assigning any and all insurance rights, benefits, and proceeds under the applicable policy, homeowners have relinquished all claims available under the policy, including Additional Living Expenses and Personal Property. See Schuster v. Blue Cross & Blue Shield of Florida, Inc., 843 So.2d 909 (Fla. 4th DCA 2003) (holding that an unqualified assignment served to eliminate the insureds standing to bring a claim against the insurer). It is extremely rare for homeowners to intend to assign their right to be paid for damage to their personal property to a restoration service. Similarly, homeowners usually do not intend on assigning their rights to be paid for Additional Living Expenses they must incur as a result of being ousted from their home. Good business ethics dictates that the restoration service probably did not intend for the assignment to limit the homeowners ability to pursue these benefits from their insurance company. Regardless of the seemingly obvious intent of the parties, insurance companies are using these unqualified assignments (assignments that assign all the rights, benefits and proceeds) to preclude homeowners from obtaining benefits under their own homeowners insurance policy in favor of the restoration service.
Interpreting the assignment in a light most favorable to insured is one way to recover benefits under the homeowners policy after the assignment of benefits has been executed. The two most prominent ways to attack the validity of a properly executed assignment is to (1) find the assignment vague and ambiguous or (2) find the assignment qualified. Where terms of agreement are unambiguous, the parties' intent must be discerned from the four corners of the document; in the absence of ambiguity, language itself is the best evidence of the parties' intent, and its plain meaning controls. Fecteau v. Se. Bank, N.A., 585 So. 2d 1005 (Fla. Dist. Ct. App. 1991). A homeowner can assert that there is no claim number or date of loss identifying the rights or claim that was purportedly assigned. Additionally, the assignment could be vague or ambiguous to the extent that it assigns all rights, but then limits the assignment by stating in consideration of RESTORATION SERVICES agreement to perform services and supply materials and otherwise perform its obligations under this contract. Moreover, this limiting language arguably indicates that the assignment only conveys rights to payment for services rendered by the restoration service company. When the assigned rights are limited by the language of the assignment, then the assignment is qualified and requires the agreement of all parties involved (spouses, co-owners, mortgagees etc) to be valid. In the majority of cases, the intent of the parties to the assignment was to limit the assignment to the right to payment for the services rendered. One last option the homeowner has available is to seek a re-assignment of benefits from the Restoration Service.
After the restoration company has rendered its services, the insured is usually left with a moisture free home that has holes in the drywall, holes in the kitchen cabinets, and no flooring. As the insured still has to pursue its insurance carrier for benefits to rebuild their home, additional living expenses, and possible contents damage, the insured is the real party in interest. That is, the person in whom rests, by substantive law, the claim sought to be enforced. Weiss v. Johansen, 898 So.2d 1099 (Fla 4th DCA 2005). The insured is the one who is obligated to comply with all policy conditions and is in the best position to pursue the claim.
As the homeowner is the real party in interest, the Assignment of Benefits in favor of a restoration service should not be construed as a blanket assignment that deprives the insured of claims for payments above and beyond the restoration service work performed. The intent of the parties is the fundamental contract principle that may afford the insured benefits under the policy of insurance after an Assignment of Benefits has been executed. The insurer lacks standing to challenge the intent of the parties to the Assignment of Benefits. See Progressive Express Ins. Co. v. McGrath Community Chiropractic, 913 So.2d 1281 (Fla 2nd DCA 2005). Therefore, there is a strong argument that an insured has not relinquished all benefits afforded by the policy after the insured has signed an Assignment of Benefits related to work performed by a restoration company.
A restoration company is entitled to full and complete payment for services rendered and an Assignment of Benefits is one way to obtain payment. Contrary to the insurance companies' belief, those benefits do not have to be paid at the exclusion of benefits to the insured, and the restoration company and insured can surely coexist in the realm of homeowner's insurance.