WHAT CONTRACTORS NEED TO KNOW ABOUT THE NEW AOB LAW
WHAT CONTRACTORS NEED TO KNOW ABOUT THE NEW AOB LAWFlorida Statute Section 627.7152 changes assignments here in Florida entered into after July 1, 2019 for contractors and emergency service companies. There are several conditions which must be complied with under the new law for your assignment to be valid which are summarized below.
A. Things Your Assignment Agreement Must Have
-The assignment must be in writing
-It must contain a provision that allows the assignor (insured/homeowner) the right to rescind or take back the assignment without a penalty or fee by submitting a written notice of rescission which is signed within 14 days after execution of the agreement or at least 30 days after the date the work on the property is scheduled to commence or 30 days after the agreement is signed if the agreement has no commencement date and no work has begun.
-the assignment must contain a provision requiring the contactor to provide a copy of the executed assignment agreement to the insurance company within 3 business days after the agreement is signed or work begins, whichever is earlier. This must be delivered to the insurance company by personal service, overnight delivery, electronic submission with proof of delivery or to the location designated in the policy.
-the agreement must contain a written, itemized, per-unit cost estimate
-the agreement can only relate to the work to be performed to protect, repair, restore, or replace the damage or to lessen or mitigate against further damage.
-the agreement must contain the following language in 18-point uppercase letters in bold:
YOU ARE AGREEING TO GIVE UP CERTAIN RIGHTS YOU HAVE UNDER YOUR INSURANCE POLICY TO A THIRD PARTY, WHICH MAY RESULT IN LITIGATION AGAINST YOUR INSURER. PLEASE READ AND UNDERSTAND THIS DOCUMENT BEFORE SIGNING IT. YOU HAVE THE RIGHT TO CANCEL THIS AGREEMENT WITHOUT PENALTY WITHIN 14 DAYS AFTER THE DATE THIS AGREEMENT IS EXECUTED, AT LEAST 30 DAYS AFTER THE DATE WORK ON THE PROPERTY IS SCHEDULED TO COMMENCE IF THE ASSIGNEE HAS NOT SUBSTANTIALLY PERFORMED, OR AT LEAST 30 DAYS AFTER THE EXECUTION OF THE AGREEMENT IF THE AGREEMENT DOES NOT CONTAIN A COMMENCEMENT DATE AND THE ASSIGNEE HAS NOT BEGUN SUBSTANTIAL WORK ON THE PROPERTY. HOWEVER, YOU ARE OBLIGATED FOR PAYMENT OF ANY CONTRACTED WORK PERFORMED BEFORE THE AGREEMENT IS RESCINDED. THIS AGREEMENT DOES NOT CHANGE YOUR OBLIGATION TO PERFORM THE DUTIES REQUIRED UNDER YOUR PROPERTY INSURANCE POLICY.
-the agreement must contain a provision requiring the contactor to indemnify (pay back) or hold harmless (protect) the insured from all liabilities, damages, losses, and costs, including attorney fees, should the policy prohibit the assignment of benefits.
B. Things Your assignment agreement cannot have
–a penalty for cancelling or rescinding the agreement
-a check or mortgage processing fee
-an administrative fee
-if the agreement is for urgent services or under emergency circumstances to a residence, the assignment cannot be for more than $3,000.00 or 1% of Coverage A.
C. Your duties under the assignment
–you have to provide the homeowner with accurate and up-to-date revised estimates
-you must perform the work in accordance with accepted industry standards
-you cannot seek a payment greater than the deductible from the homeowner unless they have agreed to additional work at their own expense.
-if the insurance company asks, you must submit to an examination under oath and recorded statements
-if an appraisal is demand or other alternative dispute resolutions methods are used, you must participate if the homeowner requires it
-you cannot attempt to collect money from the homeowner, file suit, claim a lien or report the insured to a credit agency for payments arising from the assignment.
D. What must the insured do
–they are responsible for payment of the deductible to you
-they are responsible for payment for any betterment they approved to you
-they are responsible to pay for any contracted work performed before the assignment agreement was rescinded.
E. If you are going to file suit
–you must provide the named insured, the insurance company and the assignor if they are not the named insured, written notice of intent to file suit before the lawsuit is filed. This notice must be sent certified mail, return receipt requested, or by electronic delivery at least 10 business days before filing the law suit. However, this notice cannot be served before the insurance company has determined coverage.
-This notice must specify the damages in dispute, the amount claimed, and include a presuit demand. You also must provide the named insured, insurance company and assignor a detailed written estimate or invoice of services with itemized information on equipment, materials, and supplies, the number of labor hours and proof that the work was performed in accordance with industry standards.
F. What must the insurance company do after receiving the presuit notice
-they must respond in writing within 10 business days with a presuit settlement offer or a demand for appraisal or other alternative dispute resolution.
G. Attorney’s Fees
–if the judgment is 25% less than the presuit demand, the insurance company is entitled to attorneys fees.
-if the judgment is at least 25% but not less than 50% then no one is entitled to fees.
-if the judgment is a least 50% of the disputed amount, the contractor is entitled to fees.
-if the insurance company fails to inspect the property or provide written or oral authorization for repairs within 7 calendar days after the first notice of the loss, the insurance company is not entitled to recover attorney’s fees unless the Governor declared a State of Emergency or there were factors beyond the control of the insurance company which reasonably prevented an inspection or authorization or the named insured failed to allow the inspection