The Florida House Passed an Assignment of Benefits Reform Bill
The Florida House passed an assignment of benefits reform bill on Thursday despite objections from contractors and the Restoration Association of Florida. The bill passed on a 96-20 vote on hopes that the changes will help keep insurance prices steady or even make them more affordable.
However, the House and Senate have not been able to come to agreement in the past on the AOB issue and still need to compromise before the legislative session comes to an end on May 3.
An assignment of benefits (AOB) is when a homeowner signs a AOB form which basically signs over their insurance benefits to the person working on their home. It allows someone such as a contractor or roofing company to make decisions about the work as well as bill the insurance company directly for the work being done.
AOB has become an issue as less than honest contractors have overbilled for work done or in some cases billed for work that was not completed. When the insurance company denies the claim, the contractor sues. The increased cost of lawsuits has raised the price of insurance for everyone in the Sunshine State. Skyrocketing insurance costs and a 70 percent increase in AOB related lawsuits have led lawmakers to finally address the AOB issue.
Many home repair companies as well as the Restoration Association of Florida have opposed the legislation, claiming that the new laws would tilt the system too far in the insurance companies favor. Their argument is that the AOB system is necessary to ensure that insurance policy claims are paid in full and on time.
What The Bill Changes
The bill that passed, the House bill HB 7065, which was sponsored by Civil Justice Chairman Bob Rommel, R-Naples, makes a number of changes to the AOB system. The main changes are restricting attorney fees in AOB cases while also allowing insurance companies to sell policies that remove the AOB clause altogether.
The current law requires insurance companies to cover the legal fees of anyone that brings a lawsuit against them in regards to a claim which means there is little downside to bringing a lawsuit, even one without merit. The new law would require insurers only to pay the legal costs if the homeowner themselves brings a suit, but would exclude legal fees if the suit was brought by a construction company or anyone other than the homeowner.
“This bill allows the consumers to make the choice that’s best for them, period,” Bob Rommel said according to an article in The Ledger. “This bill stops the abuse that is going on.”
The State Insurance Commissioner David Altmaier praised the House for getting the bill passed. The Restoration Association of Florida, on the other hand, issued a statement condemning the passage of the bill, “To pass dangerous AOB reforms will have negative implications for homeowners and small businesses throughout the state.”
“We call on Florida’s legislative leaders to do the right thing and support measures that protect their constituents, and not the insurance industry, who already have a significant advantage over homeowners and small businesses,” Amanda Prater, a spokeswoman for the Restoration Association of Florida, said in the statement.
While proponents of the bill claim its passage will help stop the dramatic rise of insurance premiums, critics doubt that the changes will produce any changes in insurance costs.
Barry Gilway, president and chief executive officer of the state-backed Citizens Property Insurance Corp., said in The Ledger article that the House bill would result in premium reductions this year for some Citizens customers. Eventually lower rates for other policyholders would be the result of this legislation.
“While not providing immediate premium reductions to all Citizens policyholders, the legislation would go a long way toward stabilizing rates and shortening the time it takes for Citizens to provide rate reductions to its policyholders,” Gilway said in a statement.