Insured’s Right to Assign the Benefits in a Homeowners’ Insurance Policy to Emergency Water Mitigation Companies Must be Addressed by Legislature According to Appellate Court
Citing case law from the Florida Supreme Court that was written in 1917, the Second District Court of Appeals decided in Bioscience West, Inc., a/a/o Elaine Gattus v. Gulfstream Property & Casualty Insurance Company to allow insureds to assign their benefits to the insurance to an emergency water mitigation company. Gulfstream Property and Casualty argued to the District Court that the language of Gulfstream’s policy precluded the Assignment of Benefits to the water mitigation company because the policy did not allow for an assignment of the policy to another person or entity without the consent of Gulfstream. However, the District Court of Appeals held that due to longstanding case law surrounding free assignments of rights in insurance contracts, the insured’s rights are freely assignable absent a specific clause in the contract or State law specifically precluding the assignment.
With this decision, insureds can freely assign the rights to their insurance policy to emergency water mitigation companies without consulting their carrier. These mitigation companies may, in turn, file lawsuits against the carrier. This is particularly concerning due to the increased number of water damage claims made in south Florida. The CEO of Citizens Property Insurance, Barry Gilway, recently commented on the “very disturbing” rise in both number of claims and costs associated with those claims. He estimated that water loss damage has risen to 13 percent of its claims within the past two years and total loss has risen from $9,000 to $15,000.
Although the Court in Bioscience recognized that that its decision would likely influence the adjustment process, they emphasized that this policy consideration is “for the legislature to decide, not our Court.” While some attempts have been made at curbing post-loss assignment of benefits issues, the Florida Legislature has not yet passed any law preventing them.